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S. HRG. 109–1121 

THE DIGITAL TELEVISION TRANSITION 

HEARING 

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED NINTH CONGRESS 

FIRST SESSION 

JULY 12, 2005 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED NINTH CONGRESS 

FIRST SESSION 

TED STEVENS, Alaska, Chairman 

JOHN MCCAIN, Arizona 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

DANIEL K. INOUYE, Hawaii, Co-Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

E. BENJAMIN NELSON, Nebraska 

MARK PRYOR, Arkansas 

LISA J. SUTHERLAND, Republican Staff Director 

CHRISTINE DRAGER KURTH, Republican Deputy Staff Director 

DAVID RUSSELL, Republican Chief Counsel 

MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel 

SAMUEL E. WHITEHORN, Democratic Deputy Staff Director and General Counsel 

LILA HARPER HELMS, Democratic Policy Director 

(III) 

C O N T E N T S 

Page 

Hearing held on July 12, 2005 ............................................................................... 1 

Statement of Senator Allen ..................................................................................... 58 

Statement of Senator Burns ................................................................................... 3 

Statement of Senator DeMint ................................................................................. 5 

Prepared statement 6 

Statement of Senator Ensign .................................................................................. 63 

Statement of Senator Inouye .................................................................................. 4 

Prepared statement .......................................................................................... 4 

Statement of Senator Lautenberg .......................................................................... 5 

Statement of Senator McCain ................................................................................. 1 

Statement of Senator Rockefeller ........................................................................... 60 

Prepared statement .......................................................................................... 61 

Statement of Senator Snowe ................................................................................... 65 

Statement of Senator Stevens ................................................................................ 1 

Statement of Senator Sununu ................................................................................ 6 

Statement of Senator Vitter .................................................................................... 67 

WITNESSES

Abud, Manuel, Vice President/General Manager, KVEA–TV, Los Angeles, CA; 

on behalf of Telemundo ....................................................................................... 16 

Prepared statement .......................................................................................... 17 

Fritts, Edward O., President/CEO, National Association of Broadcasters 

(NAB) .................................................................................................................... 8 

Prepared statement .......................................................................................... 9 

Knorr, Patrick, General Manager, Sunflower Broadband; Vice Chairman, 

American Cable Association (ACA) ..................................................................... 29 

Prepared statement .......................................................................................... 31 

Lawson, Hon. John, President/CEO, Association of Public Television Stations 

(APTS) ................................................................................................................... 46 

Prepared statement .......................................................................................... 47 

McSlarrow, Kyle, President/CEO, National Cable & Telecommunications Association (NCTA) .................................................................................................. 20 

Prepared statement .......................................................................................... 22 

Slenker, Richard, Executive Vice President, Technology and Engineering Operations, DIRECTV, Inc. ...................................................................................... 40 

Prepared statement .......................................................................................... 42 

Page

IV 

C O N T E N T S 

The Digital Television Transition—Afternoon Session 

Hearing held on July 12, 2005 ............................................................................... 73 

Statement of Senator Burns ................................................................................... 120 

Statement of Senator DeMint ................................................................................. 126 

Statement of Senator Ensign .................................................................................. 124 

Statement of Senator Inouye .................................................................................. 118 

Statement of Senator McCain ................................................................................. 129 

Statement of Senator Rockefeller ........................................................................... 126 

Statement of Senator Stevens ................................................................................ 73 

WITNESSES

Calabrese, Michael, Vice President/Director, Wireless Future Program, New 

America Foundation ............................................................................................. 107 

Prepared statement .......................................................................................... 109 

Kennedy, Michael D., Senior Vice President, Americas Country Management; 

Director, Global Government Relations, Motorola ............................................ 74 

Prepared statement .......................................................................................... 75 

Kimmelman, Gene, Senior Director of Public Policy and Advocacy, Consumers 

Union; on behalf of Consumers Union and Consumer Federation of America .......................................................................................................................... 91 

Prepared statement .......................................................................................... 93 

McEwen, Harlin R., Chairman, Communications & Technology Committee, 

International Association of Chiefs of Police (IACP); Communications Advisor, Major Cities Chiefs Association (MCC), National Sheriffs’ Association 

(NSA), Major County Sheriffs’ Association (MCSA) .......................................... 81 

Prepared statement .......................................................................................... 83 

Shapiro, Gary J., President/CEO, Consumer Electronics Association (CEA) ..... 99 

Prepared statement .......................................................................................... 101 

Townsend, Charles C., President/CEO, Aloha Partners, LP ................................ 85 

Prepared statement .......................................................................................... 86 

APPENDIX

Consumer Electronics Retailers Coalition (CERC), prepared statement ............ 148 

Rose, Jerry K., President, Religious Voice in Broadcasting, prepared statement ...................................................................................................................... 139 

(1) 

THE DIGITAL TELEVISION TRANSITION 

TUESDAY, JULY 12, 2005 

U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m. in room SR– 

253, Russell Senate Office Building, Hon. Ted Stevens, Chairman 

of the Committee, presiding. 

OPENING STATEMENT OF HON. TED STEVENS, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. Good morning. Thank you all for coming. 

This hearing is going to examine issues relating to setting a hard 

date to complete the DTV transition. We believe a hard date is necessary. The issue has been in the works since 1996. Public safety 

needs spectrum for interoperability for new services. Consumers 

need to get better video and audio services and more over-the-air 

programming. And consumers will also get a new series of services 

recovered from the 700 megahertz spectrum that will be—such as 

wireless broadband. 

It’s the feeling of this committee that we must balance broadcast 

cable and satellite interests with regard to digital and analog carriage after the analog broadcasts cease. Broadcasters want to ensure that all of their signals are seen by as many viewers as possible. Cable wants time to proceed with their own digital transition, 

and doesn’t want to have to immediately deploy cable converter 

boxes to all of the analog subscribers. And satellite is worried about 

spectrum concerns related to high definition that could force them 

to significantly reduce the number of local-to-local markets that 

they can serve due to capacity restraints. 

So, we look forward to receiving your testimony. And there’s 

going to be some coming and going here today, I’m sure. 

Senator McCain, do you want to go first, please? 

STATEMENT OF HON. JOHN MCCAIN, 

U.S. SENATOR FROM ARIZONA 

Senator MCCAIN. Thank you, Mr. Chairman. And thank you for 

holding this hearing. 

I believe that retrieving the analog spectrum and completing the 

digital television transition is the most critical communications 

issue facing the 109th Congress. 

For over 20 years, regulators in Washington have been debating 

the transition to digital television. It was during the 1980s that 

broadcasters first brought forth policy proposals on high-definition 

2 

television. Some believe that broadcasters sought the transition, 

not to provide clearer pictures and better sound to their viewers, 

but, rather, to prevent competition from the new broadcast stations 

and wireless carriers that the FCC had considered licensing on unused channels. 

According to one observer, Tom Hazlett, the history of DTV reads 

like a Russian novel. It was born not in the laboratory, but on K 

Street, an attempt by broadcasting lobbyists to block land-mobile 

services from gaining access to UHF spectrum, despite pressing demands for more wireless telephone competition. In an aggressive 

lobbying campaign, Congress was to give broadcasters new spectrum for digital broadcasting for free. I have often referred to this 

as the Great $70 Billion Giveaway. And according to the Telecommunications Act of 1996, this great taxpayer rip-off was to 

occur by December 31, 2006; thereby, allowing the broadcasters 

over 10 years to prepare viewers and stations for this new age of 

television. However, shortly thereafter, broadcasters changed their 

mind and persuaded Congress, in 1997, the Balanced Budget Act, 

to provide an exception to the December 31, 2006, date by requiring communities to meet an 85 percent penetration test before analog broadcasting could end. 

Last year, at a Commerce Committee hearing, then-FCC Chairman Michael Powell testified that this 85 percent penetration test 

could result in the DTV transition being put off for decades, or 

multiple decades. 

I remind my colleagues that it took color television 20 years to 

hit 85 percent penetration, and VCRs 16 years to reach that penetration. The problem is, we don’t have another 20 years to wait. 

The spectrum controlled by television broadcasters is essential to 

providing our police, fire, and other emergency-response personnel 

the necessary tools to communicate with each other in the event of 

another—national emergency. 

The use of this spectrum for public safety communications was 

one of the key recommendations of the 9/11 Commission, still attempting to be blocked by the National Association of Broadcasters. 

The bombings last week in London reinforced the immediate need 

for the spectrum. CNN reported that members of Scotland Yard 

were unable to communicate during their response to the bombings, because they lacked sufficient spectrum. Scotland Yard had to 

borrow spectrum from a wireless carrier, Vodafone; thereby, preventing millions of callers from reaching loved ones on their cell 

phones to share news of their safety. 

We can act now to prevent a similar problem in the United 

States. Our Nation can’t wait any longer. Last month, I introduced 

S. 1268, the Spectrum Availability for Emergency Response and 

Law Enforcement to Improve Vital Emergency Services Act, which 

would provide our Nation’s first responders with additional spectrum by January 1, 2009. I wish the date could have been sooner, 

but, after talking to public safety organizations and broadcasters, 

I thought, and decided, that December 31, 2008, presents the most 

reasonable deadline. I introduced this bill, Mr. Chairman, because 

I promised police, firefighters, and other emergency-response personnel I would continue the fight on their behalf. 

3 

I’m proud that Chairman Stevens has announced his intention to 

provide the spectrum to public safety organizations by January 1, 

2009. I hope that others will join in ensuring that public safety personnel have the communications tool necessary to protect our Nation. 

Mr. Chairman, I don’t have to repeat again the benefits of completing this transition. They’re not only are related to our Nation’s 

public safety; the liberation of spectrum will unleash a multitude 

of new commercial wireless services, and new opportunities for 

more broadband deployment and competition. Freeing the spectrum 

would allow us to rely more heavily on the market, rather than 

government, to regulate telecommunications. 

Mr. Chairman, I hope that we can act, and act quickly, on this 

issue. If there is another national emergency, the first responders 

are unable to communicate with each other. I think one of the most 

disgraceful chapters in the history of this committee, and Congressional oversight, is the way that the National Association of Broadcasters has continued to block this transition, and free up this 

transition. If there’s a national emergency before our first responders get this spectrum, they bear a heavy burden. 

Mr. Chairman, I thank you. 

The CHAIRMAN. Senator Burns? 

STATEMENT OF HON. CONRAD BURNS, 

U.S. SENATOR FROM MONTANA 

Senator BURNS. I want to reiterate and build off of what Senator 

McCain has said. I think he makes a point. But one thing that we 

have not done in this whole transition thing is to make sure that 

the market works, and that consumers get what they want. The 

discussion has been about hard dates, mandates, new FCC rules, 

and the like. I wonder whether we should be listening to consumers, who are our constituents, a great deal more than we have 

so far before making any big decisions. But, at the same time, 

there is also evidently not much awareness out there—in fact, I 

would say pretty close to none at all—that this is really happening, 

and that government is getting ready to take away analog spectrum; and so, make literally millions of television sets inoperable 

in every home in America. 

So far, the public education effort seems to have been inadequate, to say the least. So, I would hope that we would hear testimony this morning that would give us some indication in which direction the market wants to go. And our dedication to the people, 

not only that are charged with the responsibility of broadcasting, 

whether it be cable, or dish, or over-the-air, that—where the consumers are. And I think we have to, in order—if we are to fulfill 

our responsibility in promoting diverse information, news, and public safety, and also entertainment, then all of them have to be considered on that basis. 

So, I thank the panel for attending this morning. We look forward to your hearing. But, I’ll tell you right now, I’m looking at the 

consumers, their cost, and whether the market can make the adjustment. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Lautenberg? 

4 

Senator LAUTENBERG. I would defer to Senator Inouye. 

STATEMENT OF HON. DANIEL K. INOUYE, 

U.S. SENATOR FROM HAWAII 

Senator INOUYE. I would ask that my statement be made a part 

of the record. 

[The prepared statement of Senator Inouye follows:] 

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

I want to thank the Chairman for holding two hearings today on the many issues 

raised by the digital television transition. Over the course of these hearings, I am 

optimistic that the testimony will not only help us understand these difficult issues, 

but provide us with the tools to address them successfully. 

Not a single stakeholder denies that we need to bring the digital television transition to a successful close. We all benefit by bringing consumers better quality television service, providing public safety with the spectrum it needs to protect our communities, and unleashing new and innovative wireless services using the spectrum 

that will be reclaimed. 

Only with a realistic ‘‘hard deadline’’ will we reap these rewards. More important 

that being realistic in terms of timing, any legislation establishing a hard deadline 

must include a plan to ensure that all consumers can transition to digital with relative ease. It also must establish what carriage requirements should apply to local 

broadcast signals during and after the transition. Finally, it must maximize the benefits to consumers from the return of the analog spectrum. 

To be successful, we must address these complex public policy issues head on. A 

decision driven purely by budget considerations, rather than good public policy, will 

fail to generate the benefits we all hope to achieve. Moreover, if we fail to tackle 

the difficult issues that confront us, we will only create an artificial and illusory 

deadline. 

First and foremost, our efforts to bring the digital transition to a close must respond to challenges that consumers will face in meeting any date certain. Even 

today, citizens all across this country are purchasing analog sets with an expectation they would work for the life of the set. They did not ask for a digital television 

transition and, in many cases, are still unaware that the country is in the midst 

of a transition. Regardless of the total number of affected television sets, those citizens reliant on over-the-air television signals face the prospect of a total loss of television service. The magnitude of this potential disruption demands that we do more 

than simply hope for the best. 

This transition will only go smoothly if we help these consumers acquire the 

equipment necessary to receive the digital signal, and this means subsidizing the 

purchase of digital-to-analog converters. If we attempt to end analog television service for the cheapest possible cost and create a meager consumer subsidy based on 

the study projecting the lowest number of affected sets, I believe we are inviting 

problems. 

If, instead, we create a robust subsidy program with a comprehensive consumer 

education and outreach plan, and all affected parties come to the table with innovative solutions, the result may well be that the number of affected consumers will 

be smaller than projected and the excess funds can be returned to the Treasury. 

We know well that the potential benefits of this transition are substantial, including economic growth and job opportunities from the new uses of the returned spectrum. And I am certain that those benefits will be cited repeatedly today in support 

of a hard deadline. We will also hear that the estimate from the Congressional 

Budget Office that the auction of the analog spectrum will bring the Treasury $10 

billion is conservative. 

In the current budget climate, we face difficult decisions about how to use our limited funding resources, but we must not be penny-wise and pound foolish. If we are 

unwilling to commit up-front the necessary funds and to create the comprehensive 

education and outreach plan that is required to ensure a smooth transition, we risk 

delaying unnecessarily the economic and public safety benefits from reclaiming the 

analog spectrum. 

Thank you, Mr. Chairman. I look forward to the testimony of the witnesses on 

these complex issues. 

5 

STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM NEW JERSEY 

Senator LAUTENBERG. Thank you very much, Mr. Chairman. And 

it’s good that we’re holding this hearing, both hearings today, on 

the transition to digital television. 

Now, we know from our listening sessions in recent months, and 

from the diverse constituencies that are represented here today, 

that this transition poses many opportunities, but also many challenges. However, upon completing the DTV transition, consumers 

will enjoy a better television viewing experience. DTV is going to 

provide viewers with sharper pictures, wider screens, CD-quality 

sound, and better color rendition, all distinct advantages. 

Unfortunately, most Americans have little or no awareness about 

the magnitude of this transition that’s about to occur. And, also, 

they don’t really understand what it is that they’re going to get, 

the benefits that will accompany this change. And later on we’re 

going to hear from the public safety community, which will be one 

of the main beneficiaries of the transition. 

The transition to digital television will free up valuable spectrum, which will improve the safety of the public, as our Chairman 

announced this morning, through enhanced communications and 

reduced interference for first responders. 

This morning’s hearing is also important because we need broadcasters, cable, satellite, and public television to work together and 

to make the transition as smooth and as fair as possible. The transition will ultimately be, as I said, a truly positive step, not just 

in terms of what’s gained by the return of the analog spectrum, but 

also the improvement from digital programming. 

And I take the public-interest obligation of our broadcasters very 

seriously. I know that our Nation’s public television stations strive 

to offer innovative, educational, and community programs. And 

there are many examples of that in the State of New Jersey. 

WNJN, the New Jersey Network, was already using its digital signal to transmit job-training data last year. And I want to hear from 

those on the panel about other ways that DTV transition can enhance local content, and increase civic and educational programming. 

So, Mr. Chairman, again, I think you’ve handled this extremely 

well, in terms of the listening sessions, in terms of having all of the 

voices that really have something constructive to say about how we 

get—where we go and how we get there. So, I look forward to hearing from all sides as we review the best approach to the looming 

DTV transition. It can’t be a spectators’ game, as far as we’re concerned. We have to encourage the pace and the quality of the 

change, and the cost. 

The CHAIRMAN. Thank you very much, Senator. 

Senator DeMint? 

STATEMENT OF HON. JIM DEMINT, 

U.S. SENATOR FROM SOUTH CAROLINA 

I would like to ask that my complete statement be put in the 

record. 

Senator DEMINT. Thank you, Mr. Chairman. 

6 

I would like to just thank you for holding this very important 

hearing. I know there are a lot of different interests that we’ll hear 

from in this panel, and one later on, from broadcasters, to cable operators, to electronics producers. 

For me, this is a quality-of-life issue for the public. We’ve got 

issues here related to improving education, homeland security, and, 

I think, in a large way, American competitiveness. I think it’s time 

to get on with this transition. I think the taxpayers have paid dearly for this transition to occur. 

I’m looking forward to hearing from all of the panelists today on 

how we can make this happen, as soon as possible, in a way that 

would be least disruptive to those in the industry, but the most 

beneficial for our consumers and taxpayers. 

So, with that, Mr. Chairman, I yield back. 

[The prepared statement of Senator DeMint follows:] 

PREPARED STATEMENT OF HON. JIM DEMINT, U.S. SENATOR FROM SOUTH CAROLINA

Good afternoon. Thank you, Chairmen Stevens and Inouye for holding this second 

DTV hearing of the day, this one focusing on the spectrum issues and public safety 

aspects to digital television transition. 

The lesson of the 9/11 attacks was clear. Public Safety needs interoperable communications. Providing public safety with the needed spectrum will be the start of 

that. 

Unfortunately, public safety cannot start until the digital transition in complete 

and the broadcasters vacate the analog spectrum. 

One of the short-term risks we face in cutting off the analog broadcasts is the reliance on free-over-the-air television in the event of a natural disaster. This is of particular concern to me as a Senator from a coastal state. I would like to see the various facets of the telecom industry meet the demand for emergency information, 

much like the Amber Alert system. I think this would go a long way to saving lives 

in all kinds of emergencies. 

I thank the witnesses for coming here this afternoon to share their expertise and 

recommendations with us on how best to achieve this goal as quickly and efficiently 

as possible. 

The CHAIRMAN. Thank you very much, Senator. 

Senator Sununu? 

STATEMENT OF HON. JOHN E. SUNUNU, 

U.S. SENATOR FROM NEW HAMPSHIRE 

Senator SUNUNU. Thank you, Mr. Chairman. 

This is something that we very much need to get done. And 

maybe the good news is that everyone who steps up to this debate 

suggests that this is important, this is a transition we’re all committed to. I think there’s general consensus that we need to set a 

date for the transition. But, unfortunately, that seems to be about 

where the agreement ends. 

We will not get this done, and we will not—certainly not get it 

done successfully—unless we’re willing to make some difficult decisions, unless we’re willing to show some leadership on this issue, 

and unless we’re willing, frankly, to set aside a lot of the competing 

interests here and really focus on what makes the most sense for 

our public-spectrum policy, and what makes the most sense for the 

consumers. 

If we want to complete the digital conversion, then we need to 

set a date and work to make sure that that date that’s set is successful in its implementation. If we don’t want to make this transiVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
7 

tion, if we don’t actually want to complete this, then I think people 

that have a vested interest in slowing down or opposing the process 

should be honest and step forward and say, ‘‘You know, we’re not 

for this. We actually don’t want to go ahead into an all-digital 

world, because we think it will hurt our business model,’’ or, ‘‘We 

think we’ll lose money,’’ or, ‘‘We don’t want to return the spectrum.’’ Whatever your issue may be, you need to put it on the table 

and be honest about it. 

When we go to a fully digital world, there are some television 

sets manufactured in the 1970s, and the 1980s, and the 1990s, and 

even a few in the 2000 era, that will not directly receive digital 

transmissions. We need to deal with that. We will deal with that. 

But one thing we should not have in this debate is interests 

using consumers as a scapegoat, as a boogeyman, in order to further their own interests. I think that’s something that we need to 

avoid. It’s been done across the board. Congress is doing this because we believe a digital system is in the consumer’s interest and 

in the public interest. And I think the consumers will be well 

served. I think it’s shortsighted at best, disingenuous at worst, to 

argue a position that consumers aren’t intelligent enough to handle 

this transition. That’s essentially what we’re getting from some interests—again, across the spectrum. 

The broadcasters argue that the consumers won’t be well served 

and consumers won’t be able to handle this transition, in order to 

slow it down or to prevent certain frequencies from going to the 

public-safety interest. The cable operators argue that they need 

down-conversion; otherwise, consumers will be confused, and they 

won’t be able to get their MTV or whatever other program it is that 

they’re used to or expecting. The public interest and consumer 

groups argue that consumers will be confused unless we have large 

government subsidies and new government mandates. Everyone is 

using the specter of consumer confusion to further their own interest. And I think—well, I think it does the American public a disservice to suggest that they can’t handle this transition. 

When we set a date, we will—and, I think, we must, set a firm 

date—we’re going to have subsidies for the conversion, of some 

sort. I think we all recognize that. We shouldn’t make it a cumbersome program. We should target that subsidy, to the extent that 

it’s needed. But we will have a mechanism in place for this. 

We will have to tackle two new mandates; so the number of TVs 

that are sold that will not be able to receive digital TVs directly 

will continue to shrink. I hope, and I believe, that the providers of 

subscription services, whether it’s cable or satellite, will argue that 

their number of consumers will increase, and that will also minimize the dislocation and the difficulty of consumers. There are a 

lot of things that will be put in place in this legislation to minimize 

the difficulties of consumers when the transition takes place. But, 

for those consumers that might need to go out and buy an $80 or 

$100, or even a $200, converter box, I don’t think it will cause a 

national crisis, when and if we reach that day, when there is a 

small percentage that are in that position. To suggest that there 

will be some national crisis, in order to defend your political or financial interests, I don’t think serves the crafting of this legislation 

very well. 

8 

I hope that those are principles or concerns that color this debate, Mr. Chairman. I hope that members of this committee show 

a little bit more leadership on this issue than, perhaps, we’ve had 

in the past, because that’s going to absolutely be required if we’re 

going to get any legislation done. 

Thank you. 

The CHAIRMAN. Thank you very much. 

All statements of the Senators, opening statements, will be 

placed in the record as though read. 

My intention is to ask each of the witnesses at the table now to 

present their comments, not more than 5 minutes, if you will. And 

we will print all of your statements in the record completely, also. 

And then we’ll have a series of questions from our committee. 

So, because of no reason, other than you’re over there, Mr. Fritts, 

we’ll call on you first. 

STATEMENT OF EDWARD O. FRITTS, PRESIDENT/CEO, 

NATIONAL ASSOCIATION OF BROADCASTERS (NAB) 

Mr. FRITTS. Thank you, Mr. Chairman and Co-Chairman Inouye, 

and members of the Committee. 

In 1996, local television broadcasters and Congress entered into 

a public/private partnership to bring the future of television to the 

American consumer. When we undertook this endeavor, Congress 

was seeking to promote a number of goals. Key among them was 

ensuring that America’s system of broadcasting remains the most 

technologically-advanced source of news, local information, and entertainment. 

Local television is as vital a part of America’s way of life today 

as it was when we started the journey, back in 1996. This past 

weekend, with the Florida hurricane, local Florida television stations kept the public informed, calm, and safe. Yesterday, the 

President of the American Red Cross commented on our stations, 

and I quote, ‘‘Time and again, Americans rely on local broadcasters 

to provide critical information that saves lives and offers hope in 

times of need,’’ unquote. It’s valuable services like these that will 

be strengthened and enhanced when the digital television transition is successfully completed. 

Broadcasters accept—let me underscore—broadcasters accept 

that Congress will implement a 2009 hard date for the end of the 

analog broadcasts. And we’re ready. We’ve done our part. We’ve invested billions to put up more than 1,500 local digital stations on 

the air, right now. 

As Congress and the affected parties work to end this transition, 

one stakeholder must be central, and that’s the consumers. This 

committee and Congress should ensure that consumers—our viewers, your constituents—can enjoy the benefits of a fully developed, 

free, local digital television system. For instance, after the transition in 2009, if you’re a cable subscriber with both analog and digital sets in your home, you’ll want the analog sets to work in analog, and you’ll want your digital sets to work in digital. Consumers 

should be empowered to make that choice about which signal to receive, not the cable gatekeeper. 

Consumer interest should also drive the debate in the area of 

full-signal carriage. Today, some 585 television stations across the 

9 

country are using DTV to split their signal into multiple programming streams. This practice, called multicasting, holds one of the 

great promises of the digital transition; namely, more free local 

programming options for the public. 

What’s taking place in the market right now? An example: 

WDBJ, in Roanoke, Virginia, broadcasts CBS programming in 

HDTV; and, through multicasting, the station also offers a programming feed with extended coverage of breaking news, ACC 

sports, and Virginia Tech football games. And dozens of market 

stations are multicasting to supply network programming that was 

previously not there. For example, in Tallahassee, CBS affiliate 

WCTV uses multicasting to also supply the UPN Network to programming viewers. 

Multicasting means greater opportunities to serve diverse demographics. Ninety stations nationwide are multicasting in foreignlanguage programming. The languages range widely from German, 

to Korean, to Spanish, to Vietnamese. And most important from 

the consumer standpoint, these services are free. Regrettably, in 

many cases cable operators refuse to provide these services to their 

subscribers. If the cable monopolies strip these free services from 

broadcaster signals, it will be difficult for stations to fully develop 

multicasting. 

The history of the television industry offers some lessons here. It 

was only after Congress passed the 1992 Cable Act, that guaranteed cable carriage, that networks like FOX, UPN, the WB, 

Telemundo, and Univision fully matured. Likewise, cable carriage 

would be necessary for new multicasting programming to bloom. 

Let’s be clear, the multicast issue is not about capacity. Regardless of whether they multicast or do a single stream of HDTV programming, a broadcaster’s digital signal takes up no more bandwidth on the cable system. In fact, with new compression technologies, whether a station multicasts or not, they will occupy onehalf of the cable bandwidth they took up in the analog world. The 

cable system will get back the rest. 

So, Mr. Chairman, the move to DTV has always been, first and 

foremost, about consumers—your constituents and our viewers. 

America’s local broadcasters share your goal of successfully completing this DTV transition. We are here to work with you in moving this legislation that will complete this transition; that will free 

the analog spectrum for other uses, and, ultimately, will bring the 

full benefits of the highest digital technology to the American television viewer. 

Thank you for the opportunity to participate, and I look forward 

to your questions. 

[The prepared statement of Mr. Fritts follows:] 

PREPARED STATEMENT OF EDWARD O. FRITTS, PRESIDENT/CEO, 

NATIONAL ASSOCIATION OF BROADCASTERS (NAB) 

Thank you, Mr. Chairman, for the opportunity to appear before the Commerce 

Committee today. I am Edward O. Fritts, President and Chief Executive Officer of 

the National Association of Broadcasters (NAB). NAB is a nonprofit, incorporated 

association of radio and television stations, which serves and represents the American broadcasting industry. 

The television broadcast industry as a whole will spend, by the end of the transition process, approximately 10–16 billion dollars to convert from analog technology 

10 

to digital technology. Today, 1,508 television stations are broadcasting digital signals, which reach over 99.9 percent of the television households in the country. The 

promise of this technology for both television broadcasters and viewers is great. 

Broadcasters will be better able to serve their audiences by offering vastly improved 

picture quality including high definition (HD), more diverse program offerings on 

multiple streams, and even nonprogram services such as data services. The promise 

of digital television services for broadcasters and viewers alike will be curtailed, 

however, and broadcasters’ investment at least partially stranded, if cable operators 

are allowed to exercise unchecked their power to refuse carriage of multiple streams 

of digital broadcast material. 

Accordingly, my remarks today will address the importance—for both the broadcast industry and the viewing public—of cable carriage for local broadcasters’ full 

digital signals, including their multicast programming streams. Full signal carriage 

will help ensure a vibrant, free over-the-air digital broadcasting system, and the development of diverse programming to even better serve broadcasters’ local communities. It will also advance the digital transition, thereby speeding the clearing of 

spectrum for the provision of vital public safety services. Moreover, the rapid growth 

of cable capacity in recent years has rendered negligible any burden that carriage 

of broadcasters’ full digital signals (including any multicast programming streams) 

imposes on cable operators. Particularly in light of this tremendous growth in cable 

capacity, a Congressional requirement that cable operators carry local broadcasters’ 

multicast programming streams offered free over-the-air will clearly pass Constitutional muster. 

Full Signal Carriage Will Help Preserve Our System of Free, Over-the-Air 

Local Broadcast Television in the Digital Age 

The Cable Television Consumer Protection and Competition Act of 1992 (Cable 

Act), was based on the premise that ‘‘must-carry’’ would preserve the benefits of 

free, over-the-air local broadcast television, particularly for those viewers who did 

not subscribe to cable.1 The Supreme Court agreed and recognized that preservation 

of our system of broadcasting was ‘‘an important governmental interest.’’ 2 As we 

change our system of broadcasting from analog to digital, there is no reason to divert from this simple truth. Cable carriage of the full digital signal, whether one 

HD or multiple program streams, would similarly help preserve our system of free, 

over-the-air local broadcasting, especially for the benefit of viewers solely dependent 

on this means of receiving programming. 

In the 1992 Cable Act, Congress made ‘‘unusually detailed statutory findings’’ regarding the ability and incentive of cable operators to refuse carriage of the signals 

of many broadcasters, as well as the harm resulting from that refusal. Turner, 512 

U.S. at 646. Congress found that ‘‘because cable systems and broadcast stations 

compete for local advertising revenue,’’ and ‘‘because cable operators have a vested 

financial interest in favoring their affiliated programmers over broadcast stations,’’ 

cable operators have a ‘‘built-in economic incentive’’ not to ‘‘carry local broadcast signals.’’ Id. Congress concluded that ‘‘absent a requirement that cable systems carry 

the signals of local broadcast stations, the continued availability of free local broadcast television would be threatened.’’ Id. Indeed, without the 1992 Cable Act, ‘‘cable 

systems would likely carry significantly fewer over-the-air stations,’’ ‘‘station revenues would therefore decline,’’ and the ‘‘quality of over-the-air programming on 

these stations would almost inevitably suffer.’’ 3

The Federal Communications Commission’s refusal to recognize a carriage requirement for broadcasters’ multicast programming streams within their digital signals has endangered the vibrant, free over-the-air service that Congress explicitly 

sought to protect in the Cable Act.4 Cable operators today compete with local broadcast stations even more fiercely for advertising revenue, and continue to have ‘‘a 

vested financial interest in favoring their affiliated programmers over broadcast stations,’’ thus retaining an ‘‘economic incentive’’ to refuse to ‘‘carry local broadcast signals.’’ 5 The consequences of the FCC’s action giving cable operators the power to 

refuse carriage of significant broadcast programming makes effective competition 

between broadcasters and cable operators virtually impossible. Cable systems now 

have the ability to deny their direct competitors—the broadcasters—access to their 

subscribers, totaling two-thirds of the potential audience, for any innovative digital 

multicasting services. Broadcasters deprived of the ability to take advantage of the 

full economic opportunity that digital technology offers will be unable to compete effectively for the critical advertising revenue upon which broadcasters (unlike cable 

operators) almost solely depend. The absence of a multicast carriage requirement 

therefore threatens to undermine the viability of local broadcast stations in the digital age, leading to precisely the decline in the quality and diversity of over-the-air 

programming that Congress sought to forestall in the Cable Act. And not only will 

11 

television stations and our system of local broadcasting be injured—viewers who depend on over-the-air broadcasting for their entertainment and information will be 

the ultimate losers. 

The dangers presented by the FCC’s refusal to grant full signal carriage will be 

particularly acute for over-the-air viewers served by broadcasters in small and medium markets. As the Commission itself has recognized, ‘‘the ability of local stations 

to compete successfully in the delivered video market [has been] meaningfully (and 

negatively) affected in mid-sized and smaller markets.’’ 6 Given the already fragile 

financial condition of many smaller market television broadcasters, the economic 

threat posed by cable companies’ failure to carry multicasting streams is real. Lack 

of full signal carriage will have a major impact on broadcasters’ ability to sustain 

the very significant costs associated with the digital transition, including the costs 

of developing new and innovative programming for multicast channels. These costs 

are proportionally much greater for broadcasters in small and medium-sized markets. Multicasting would permit broadcasters to spread the costs of providing this 

new programming (including local news and information) over more revenue 

streams. Offering multiple programming streams will also enhance broadcasters’ 

ability to compete with multichannel cable operators for the limited pool of advertising dollars. Thus, the absence of a full signal carriage requirement will be especially deleterious for broadcasters in medium and small markets and for smaller, 

less profitable broadcasters in all markets, the very stations that will likely not be 

carried via retransmission consent negotiations. 

For these reasons, the governmental interest in a vibrant, free over-the-air local 

broadcasting system would be directly advanced by preventing cable operators from 

blocking the growth of new programming options, including multicast program 

streams. Congress has a clear ‘‘interest in preserving a multiplicity of broadcasters 

to ensure that all households have access to information and entertainment on an 

equal footing with those who subscribe to cable.’’ Turner, 520 U.S. at 194. A full 

signal carriage requirement is essential to preserving a competitively healthy local 

broadcasting system providing a rich mix of over-the-air programming, especially for 

viewers solely dependent on free television. 

Full Signal Carriage Will Promote the Development of Diverse 

Programming for the Viewing Public as a Whole 

Beyond preserving the benefits of free, over-the-air broadcasting, Congress found 

in the 1992 Cable Act, that ‘‘must-carry’’ promoted the widespread dissemination of 

information from a multiplicity of sources.7 When approving the analog must-carry 

rules, the Supreme Court agreed that this also is an important governmental interest. Turner, 512 U.S. at 662–63. A full digital carriage requirement would similarly 

promote the development and dissemination of diverse programming from a variety 

of sources for all television viewers, whether they subscribe to cable or not. 

Broadcast signals are the only channels on a cable system (except for local access 

and PEG channels) that are not under the control of a single voice, the cable operator. Congress has found that a ‘‘primary objective and benefit of our Nation’s system of regulation of television broadcasting is the local origination of programming,’’ 

and that ‘‘[b]roadcast stations continue to be an important source of local news and 

public affairs programming and other local broadcast services critical to an informed 

electorate.’’ 8 Increasing the opportunity for local television stations to provide new 

and innovative digital services directly advances these Congressional goals, particularly in light of current concerns over clustering and consolidation in the cable industry.9 Carriage of broadcasters’ multicast program streams will in fact guarantee 

that additional programming sources not under the control of a cable operator, are 

widely accessible and added to the information mix available to both cable subscribers and over-the-air viewers alike in communities throughout the country. 

A brief sampling of the multicast services that television stations are currently 

providing, or plan to offer, is instructive. As shown below, local broadcasters are 

using, and plan to use digital multicasting streams to provide a wide variety of programming that is currently not available either over-the-air or on most cable systems. And much of this programming is exactly the type of local and informational 

programming that Congress sought in the Cable Act to promote. 

According to Decisionmark, a media technology company, 585 television stations 

currently offer at least some multicast programming, and many of these stations 

offer three or more multicast channels. This programming includes news, weather, 

sports, and religious material. This multicast programming also includes content in 

foreign languages ranging from Arabic to Vietnamese, with a number of stations 

providing Spanish multicast programming. 

Broadcasters have also described their multicast programming and their plans for 

multicasting in numerous submissions to the FCC.10 For example, NBC affiliated 

12 

stations want to multicast weather channels, as well as local alerts, and traffic and 

travel-related information. CBS and NBC affiliates are planning local news channels that would offer local news and extended coverage of local events, local sports, 

and AMBER alerts for missing children.11 The New York Times Broadcasting Group 

is exploring ways to use multicasting to provide focused local news to viewers in 

particular towns and communities. The CBS affiliate in Toledo, Ohio, is exploring 

opportunities for multicasting state legislative debates, mayoral press conferences, 

city council hearings, and school committee hearings. The ABC affiliate in Fresno, 

California, aired full screen election results on its second channel during the gubernatorial recall election. Beyond utilizing multicast capabilities to offer increased 

local news and other local programming including public affairs, weather and 

sports, broadcasters have also indicated their interest in using multicasting to air 

minority-oriented, children’s, and educational programming.12

Broadcast stations are currently offering multicast programming and hope in the 

future to offer even greater amounts and types of multicast services. However, the 

absence of any assurance of multicast carriage is a powerful disincentive for broadcasters to invest the considerable sums needed to develop multiple streams of locally-oriented and other innovative multicast programming. For example, DIC Entertainment has stated that its plan to offer nationally a free, advertiser-supported, 

over-the-air digital children’s television service is practically infeasible in the absence of mandatory carriage for multicast streams.13 No free, over-the-air service 

dependent upon advertising revenue can hope to survive if it is not carried by cable 

systems, and can therefore be received only by that relatively small segment of the 

viewing public that does not subscribe to cable. Broadcasters will be reluctant to 

bring their multicast service plans to fruition in the absence of a clear full digital 

signal carriage requirement. Stations rightly fear that they will be unable to obtain 

carriage on many cable systems, and that their substantial investments in multicast 

services will be stranded. As a result, cable subscribers and non-subscribers alike 

will be deprived of the full benefits that digital technology enables, including 

multicast programming selected to reflect the tastes and needs of their local communities. 

Commercial broadcasters have in fact experienced substantial difficulties in obtaining full signal carriage through negotiations with cable operators.14 The agreement reached between public television stations and the cable industry pertaining 

to carriage rights does not in any way suggest that commercial broadcast stations 

will be similarly successful in negotiating carriage for multicast programming on 

reasonable terms. Unlike public stations, commercial stations directly compete with 

cable for advertising dollars, so cable operators have greatly increased incentives to 

deny full signal carriage to commercial stations.15

In light of the multicast services currently offered by broadcasters and their plans 

to develop further multicast streams to serve their local communities with a wide 

range of programming, allowing cable operators to exercise unchecked their power 

to refuse carriage of this valuable programming does not serve the public interest. 

A full signal carriage requirement would ensure that broadcasters’ multicast programming streams can be accessed by that majority of the viewing public subscribing to cable, and would therefore serve Congress’ interest in promoting the development and dissemination of a wide variety of programming from a multiplicity 

of sources. 

Full Signal Carriage Will Advance the Digital Transition 

The offering of attractive digital programming, including multicast programming, 

by local television stations will provide incentives to consumers to purchase digital 

reception capability (such as an HD receiver or a converter that will allow viewing 

of digital programs on analog sets), thereby facilitating the end of the digital transition.16 For example, WDBJ in Roanoke, Virginia, which provides two locally-originated multicasting services, ‘‘is helping to stimulate consumer sales of digital tuners 

in [its] viewing area.’’ To accelerate the digital transition, the station ‘‘has fostered 

two-way communication with viewers owning digital receivers and HDTV sets’’ by 

sending regular e-mail updates about WDBJ’s digital HD and multicast services to 

customers who have told the station they have digital sets.17

If, however, broadcasters’ multicast programming streams are not carried on cable 

systems, then viewers subscribing to cable will be unable to receive those programming streams even if they purchase digital receivers—which will obviously reduce 

the incentive of consumers to obtain digital reception capability. The absence of a 

full signal carriage requirement will accordingly retard the pace of the digital transition, which does not serve the public interest. Beyond clearing spectrum for auction and, ultimately, the provision of new wireless and other services for consumers, 

13 

advancing the digital transition will, most importantly, clear spectrum for the provision of vital public safety services. 

Particularly in Light of the Rapid Growth in Cable Capacity, the Burden 

of Full Signal Carriage on Cable Operators Would Be Negligible 

Not only will requiring carriage of multicast digital programming streams provide 

myriad benefits to the viewing public and to our system of free, over-the-air broadcasting, such a carriage requirement will entail little burden on cable operators, particularly in light of the tremendous expansion in cable capacity in recent years. In 

fact, requiring digital cable carriage of all of the separate free programming streams 

of a broadcaster’s digital signal imposes no greater burden than requiring carriage 

of a broadcaster’s single digital channel (which is clearly already required by the 

1992 Cable Act). A digital broadcast signal will include 19.4 megabits per second 

of data within 6 MHz of spectrum whether it contains one program stream or multiple streams. From the perspective of the cable operators’ capacity to carry the digital broadcast, there is simply no difference between a broadcaster’s decision to 

broadcast its signal as a single stream or as multiple streams. 

As an absolute matter, moreover, the total cable capacity to be used by a digital 

broadcast signal is substantially less than the capacity used to carry a single analog 

signal. Because of modulation techniques available to digital cable operators, carriage of the entire digital broadcast signal will use only 3 MHz of cable capacity. 

Indeed, cable systems, when responding to an FCC survey about cable capacity, 

agreed that while cable carriage of one analog broadcast television signal required 

a full 6 MHz cable channel, two digital broadcast television signals could be carried 

on that same channel.18 Thus, at the end of the digital transition, digital cable systems will use only half the capacity to transmit local broadcast signals than they 

needed for the same stations’ analog signals. And, as discussed above, a broadcaster 

using its digital channel to air multiple standard definition streams occupies no 

more cable capacity for the digital signal, as a practical matter, than a broadcaster 

airing a single HD programming stream, which cable operators will clearly be required to carry pursuant to existing statutory mandates. 

The alleged burden on cable operators of carrying broadcasters’ digital multicast 

programming streams is further shown to be insignificant when one considers the 

remarkable growth in the capacity of cable systems in recent years. One estimate, 

drawn from the cable industry’s own responses to an FCC survey, concluded that 

cable program capacity increased 83.5 percent from 1999 to 2003, and additional increases in capacity have and will continue to come online. Weiss Study at 27. The 

capacity of the average cable system has grown so large that, combined with the 

benefits of digital compression technology, requiring cable systems to carry all free 

programming streams of digital stations would not foreclose cable systems from carrying other programs of their choice. Likewise, it would not diminish cable programmers’ opportunities to place their programs onto cable systems. 

Indeed, the announced plans of cable operators belie their claims that capacity is 

limited. Multichannel News recently reported that ‘‘[a]ll the major MSOs have announced plans to launch digital simulcast—or are actively launching it—in their 

systems.’’ 19 Digital simulcasting involves carrying all signals on a cable system— 

cable and broadcast—in both analog and digital formats. Although carrying all programming in both digital and analog formats would certainly use far more capacity 

than carriage of local broadcasters’ digital signals (including their multicast program streams), Comcast’s Senior Vice President of Engineering Operations stated, 

‘‘[w]e have plenty of capacity on the network side.’’ 20 As another news reports concluded, ‘‘[i]t would seem unlikely that [Comcast and Time Warner] would have a capacity problem with dual carriage’’ (i.e., carrying both broadcasters’ analog and digital signals during the digital transition), if ‘‘voluntary dual carriage is their publicly 

announced business plan.’’ 21 This committee, therefore, cannot take seriously cable 

operators’ claims that carriage of broadcasters’ digital multicast program streams 

imposes a material capacity burden on cable systems. 

Requiring Cable Operators To Carry Local Stations’ Full Digital Signals 

Would Clearly Be Constitutional 

In the absence of a burden on cable systems from the carriage of broadcasters’ 

multicast programming streams, a full signal carriage requirement would pass constitutional muster. Indeed, given the expansion of cable capacity previously described, carriage of local broadcast digital signals would not have a material impact 

on cable speech, and thus a full signal carriage rule should not even be subject to 

a First Amendment question. 

As discussed in detail above, the burden imposed by carriage of multiple broadcast streams of a single digital signal is no more than the burden imposed by carVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
14 

riage of a single digital broadcast signal. Further, the burden imposed by carriage 

of a digital broadcast signal—whether multiple streams or a single stream—is less 

as an absolute matter than the burden imposed by analog must-carry approved by 

the Supreme Court in the Turner cases.22 In addition, due to the explosion of cable 

capacity, and the lack of any significant increase in the number of full power local 

television stations, the relative burden imposed by carriage of these stations’ signals 

is now a fraction of that approved in the Turner cases. Indeed, even the carriage 

of both the analog and digital signals of all local commercial television stations 

would occupy a far smaller percentage of cable capacity than did carriage of only 

analog stations when the must-carry statute went into effect.23 The Supreme Court 

in Turner regarded that burden as minimal and acceptable, particularly in light of 

the important benefits afforded by must-carry.24 Clearly, the smaller burden presented by requiring carriage of broadcasters’ digital multicast programming streams 

should not raise any serious First Amendment questions. 

In sum, given the increase in cable capacity in recent years, only a tiny fraction 

of that capacity will be devoted to carrying local broadcasters’ digital signals, including their multicast programming streams. Consequently, a full signal carriage requirement would not have a remotely significant impact on the programming 

choices made by cable systems, or the opportunity of cable programmers to obtain 

carriage. Because cable programming choices would not be materially affected by 

any digital must-carry obligations, no First Amendment issue would even be implicated by a full digital signal carriage requirement.25 By upholding the analog mustcarry rules, which represented an absolutely and relatively greater burden on cable 

operators than digital must-carry obligations would, the Supreme Court settled the 

question of the constitutionality of any full signal carriage requirement. 

Conclusion 

Mr. Chairman, NAB and its television stations members are committed to completing the digital transition expeditiously, and to bringing the benefits of digital 

technology to viewers throughout the country. Digital broadcasting promises both to 

enhance the competitive viability of local commercial television stations, and to 

bring improved video services to the viewing public. But the full benefits of digital 

technology may not be realized if cable operators are allowed to prevent the vast 

majority of television viewers from accessing the multiple streams of digital broadcast material offered by local television stations. Requiring cable systems to carry 

broadcasters’ multicast programming streams will help ensure a vibrant, free overthe-air local broadcasting system, will promote the development of diverse digital 

programming, and will advance the digital transition. These benefits can, moreover, 

be achieved without burdening cable systems or infringing the First Amendment 

rights of cable operators. Again, NAB wishes to express its appreciation to the members of the Commerce Committee for the opportunity to testify and for their attention today. 

ENDNOTES 1 47 U.S.C. § 521 note (Cable Act § (2)(a)(12)). 

2Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 662–63 (1994). 3Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180, 228 (1997) (Breyer, J., 

concurring). 4The FCC has erroneously concluded that there is no requirement under the 

Cable Act for cable systems to either: (i) carry both the analog and digital signals 

of local commercial television stations during the digital transition; or (ii) carry 

multicast programming even after the transition is completed. See Second Report 

and Order and First Order on Reconsideration, Carriage of Digital Television Signals, CS Docket 98–120, FCC 05–27 (rel. Feb. 23, 2005). NAB and other broadcast 

groups have requested the FCC to reconsider this decision. 5 In both percentage and absolute terms, cable’s advertising revenues (for which 

cable companies compete with broadcasters) have skyrocketed since 1992. Between 

1992 and 2003, cable revenue from local advertising increased 367 percent, and is 

estimated to have increased another 13.5 percent in 2004. See NCTA, Cable Developments 2004 at 15 (2004); Eleventh Annual Report, Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, at ¶ 29, MB 

Docket 04–227, FCC 05–13 (rel. Feb. 4, 2005) (Eleventh Annual Report). 6 Report and Order and Notice of Proposed Rulemaking, 2002 Biennial Regulatory 

Review, 18 FCC Rcd. 13620, 13698 (2003). NAB has also demonstrated that the 

profit margins for network-affiliated stations in medium and small markets have declined in recent years. Indeed, low-rated network affiliates in smaller markets are 

actually losing money, not earning profits. See id. 7 47 U.S.C. § 521 note (Cable Act § 2(a)(6)). 

15 

8 47 U.S.C. § 521 note (Cable Act § 2(a)(10) and (11)). 

9 In June 2004, the four largest cable operators served about 58 percent of all U.S. 

cable subscribers. Eleventh Annual Report at ¶ 15. This consolidation will only increase in the future, as Comcast and Time Warner are acquiring Adelphia’s systems. 10See, e.g., Special Factual Submission by the CBS Television Network Affiliates 

Association in Support of Multicast Carriage Requirement, CS Docket 98–120 (filed 

Jan. 13, 2004); Special Factual Submission in Support of Multicast Carriage by the 

NBC Television Affiliates Association, CS Docket 98–120 (filed Jan. 8, 2004). 11WRAL–DT, the CBS affiliate in Raleigh, North Carolina, has been offering its 

viewers HD programming and a full-time local news service on its digital channel 

for several years. Similarly, KTVB–DT, the NBC affiliate in Boise, Idaho, offers 24- 

hour local news on a multicast channel. 12See Special Factual Submissions of the CBS and NBC Television Affiliates Associations; see also Ex parte submissions of the Minority Media & Telecommunications 

Council; Black Education Network; DIC Entertainment; and the National Medical 

Association in CS Docket 98–120. 13See Petition for Reconsideration of DIC Entertainment Corporation, CS Docket 

98–120 at 3 (filed April 21, 2005). DIC stated that no competitive children’s service 

of the kind it envisioned can expect to arrange reasonable carriage terms with cable 

operators ‘‘that have significant reasons to protect the children’s services they are 

already carrying.’’ Because a number of cable operators now have their own local 

or regional news channels, they are also unlikely to carry a competitive multicasting 

news stream from a local broadcast station. 14Decisionmark has noted the substantial percentage of multicasting commercial 

stations that cannot obtain carriage for even one multicasting service. Even large 

television groups, including LIN Television, Hearst-Argyle Television, and the New 

York Times Broadcasting Group, have cited their inability to successfully negotiate 

with many cable operators for multicast carriage. And if these groups cannot obtain 

carriage for their multicast services, then smaller broadcast groups or stand-alone 

stations would very likely experience even greater difficulties in obtaining carriage. 

For instance, Marantha Broadcasting Company in Pennsylvania has reported that 

it has been unable to negotiate carriage with large cable operators for its 24-hour 

local weather multicast service. 15See 47 U.S.C. § 521 note (Cable Act § 2(a)(15)). And as discussed above, broadcasters and cable operators compete much more fiercely today for advertising revenue than they did when the Cable Act was passed. 16 Either purchase would count a household toward the 85 percent requirement 

of Section 309(j)(14)(B)(iii)(II), signaling the end of the digital transition. See 47 

U.S.C. § 309(j)(14)(B)(iii)(II). 17Declaration of Robert G. Lee, President and General Manager, WDBJ(TV)(DT), 

Roanoke, Virginia, at ¶ 5 (Jan. 8, 2004), Attached to Submission of CBS Television 

Network Affiliates Association, CS Docket No. 98–120 (Jan. 13, 2004). 18See Merrill Weiss Group, Analysis of Cable Operator Responses to FCC Survey 

of Cable MSOs, at 12, Attachment A to Reply Comments of NAB/MSTV/ALTV, CS 

Docket 98–120 (filed Aug. 16, 2001) (Weiss Study). 19Multichannel News, May 23, 2005 at 1, 76. According to this report, Comcast 

will launch digital simulcast on most of its systems in 2005, and Charter Communications, Cox Communications, Time Warner Cable, Insight Communications, and 

Adelphia Communications also said they would start digital simulcast conversion. 

These operators serve over 70 percent of all cable subscribers. 20Multichannel News, May 23, 2005 at 78. 21Multichannel News, May 30, 2005 at 4. 22Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622 (1994); Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180 (1997). As set forth above, cable systems 

can carry two 6 MHz digital broadcast signals in one 6 MHz cable channel, rather 

than carrying just one 6 MHz analog signal in one cable channel. 23 According to the Weiss Study, based on the cable industry’s own reports of its 

capacity, in 1993, when the (analog) must-carry rules first became effective, carriage 

of local commercial stations occupied 13.35 percent of the capacity of the average 

cable system. By 1999, cable capacity used by local commercial stations fell by more 

than half to 6.25 percent. The study estimated that only 8.46 percent of cable capacity would be needed for transmission of both analog and digital local commercial signals when all stations were transmitting two signals during the digital transition. 

And the study concluded that when analog broadcasting ceased altogether, carrying 

all local digital commercial signals would occupy only 2.63 percent of cable capacity. 

Weiss Study at 14. 

16 

24Turner, 520 U.S. at 215 (affirming constitutionality of must-carry because the 

‘‘burden imposed’’ is ‘‘congruent to the benefits it affords’’). 25The Supreme Court in the first Turner case stressed the importance of evidence 

establishing the ‘‘actual effects,’’ if any, on the programming choices of cable systems 

in analyzing the constitutionality of the must-carry rules. See Turner, 512 U.S. at 

667–68 (remanding the case to obtain further evidence of the extent the must-carry 

rules burdened speech, particularly the extent to which cable operators would, ‘‘in 

fact, be forced to make changes in their current or anticipated programming selections; the degree to which cable programmers will be dropped from cable systems 

to make room for local broadcasters; and the extent to which cable operators can 

satisfy their must-carry obligations by devoting previously unused channel capacity 

to the carriage of local broadcasters’’). 

The CHAIRMAN. Thank you. I failed to mention Mr. Fritts was 

speaking for the National Association of Broadcasters. 

And next, Manuel Abud, Vice President and General Manager of 

Station KVEA–TV, Telemundo. 

STATEMENT OF MANUEL ABUD, VICE PRESIDENT/GENERAL 

MANAGER, KVEA–TV, LOS ANGELES, CA; ON BEHALF OF 

TELEMUNDO 

Mr. ABUD. Thank you, Mr. Chairman, Co-Chairman Inouye, 

members of the Committee. 

My name is Manuel Abud. I’m Vice President and General Manager of KVEA Television, Channel 52, which is a Television 

Telemundo Station, in Los Angeles. And I thank you for the opportunity to testify today on behalf of Telemundo regarding issues surrounding the digital television transition. 

My appearance before you today is not simply as a Telemundo 

executive, or even as a broadcaster; I’m also testifying in my capacity as a member of the Hispanic community. My community is dependent on Spanish-language over-the-air broadcasting as a primary source of news and local information. My station alone does 

19.5 hours per week of local Spanish-language news to serve our 

viewers. 

Forty-three percent of Spanish-speaking households watch overthe-air television, exclusively. Moreover, digital television technology has failed to make significant inroads into the Hispanic 

community. If Congress produces DTV legislation that fails to extend the benefits of DTV to all consumers, Spanish-language television viewers will be disproportionately harmed. 

Telemundo supports a hard cutoff date for ending analog broadcasts, but setting a hard deadline remains only one piece of the 

puzzle. Several other components must be addressed in order to ensure that the transition to digital television is one that consumers 

will view as a net gain, and not as a net loss. 

First, a subsidy is needed for consumers to purchase digital-toanalog converters. We must ensure that households that rely exclusively on over-the-air broadcasting, such as the mainly Spanishspeaking households, are not literally left in the dark once analog 

television is shut off. Failure to include a consumer assistance program in DTV legislation will have a disproportionately negative impact on Spanish-language households. 

Second, MVPD carriage of digital multicast is essential. The ability to send multiple additional free channels of programming without using additional spectrum allows broadcasters to serve their 

local communities better than ever before through hyper-local news 

17 

and community information, local political coverage, and local 

weather and traffic. Multicast channels also permit more rapid, detailed, and geographically targeted dissemination of local and national emergency information. 

What excites me most about multicasting is that it would enable 

Telemundo to greatly expand the amount, breadth, and quality of 

free broadcast programming serving Hispanic communities. This 

could make a very meaningful, positive contribution to Spanishspeaking citizens. Absent a meaningful, must-carry requirement 

that includes multicast carriage, this digital dividend will be sacrificed. 

Without having assurances that the entire Spanish-language audience will have access to multicast programming channels, we 

cannot create a workable business model with which to fund this 

initiative. As a result, ironically, as Congress is requiring millions 

of consumers to invest in new digital equipment in order to watch 

television, it will simultaneously be depriving them of one of the 

most important benefits they will receive for their purchases. 

Third, consumers must have access to DTV signals in un-degraded form. A conversion to DTV that requires consumers to purchase new equipment, and yet diminishes or denies consumers access to HDTV, a paramount benefit of digital television technology, 

makes absolutely no sense. Multichannel video-programming providers must be required to retransmit any and all broadcast signals, including high-definition programming on their basic tier in 

its original format and quality to all subscribers. Additionally, if a 

cable operator chooses to down-convert any digital broadcast signal 

at the cable headend, it should be permitted to do so only as long 

as the cable operator does the same for all broadcast channels it 

retransmits. Absent such a requirement, a cable operator could 

choose to provide an analog feed of only the top network affiliates, 

and leave in the lurch the analog viewers of smaller religious and 

foreign-language broadcast channels, including Telemundo. 

Finally, every stakeholder has a responsibility to augment their 

efforts to educate Americans about the digital transition. Telemundo supports mandated point-of-sale consumer notices by retailers and manufacturers. 

Thank you, again, for this opportunity to appear before you today 

and share with you concerns of Spanish-speaking Americans who 

have much to gain, but also much to lose in this digital transition. 

[The prepared statement of Mr. Abud follows:] 

PREPARED STATEMENT OF MANUEL ABUD, VICE PRESIDENT/GENERAL MANAGER, 

KVEA–TV, LOS ANGELES, CA; ON BEHALF OF TELEMUNDO

Chairman Stevens, Senator Inouye, and members of the Committee, my name is 

Manuel Abud, and I am the Vice President and General Manager of KVEA–TV, 

Channel 52, Telemundo’s station in Los Angeles, California. Thank you for the opportunity to testify before you today on behalf of Telemundo regarding issues surrounding the transition to digital television. 

I testify today not simply as a Telemundo executive, or even just as a broadcaster, 

but also as a member of the Hispanic-American community, and as a Spanish language speaker. Many members of my community speak Spanish as their primary 

language, and are dependent on Spanish language over-the-air broadcasting as their 

primary source of news and local information. We are the ‘‘go to’’ source for news 

and information for the Spanish speaking community. The work of this committee 

ultimately will determine to what extent Spanish language television viewers conVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
18 

tinue to have critical access to free over-the-air Spanish language television in the 

digital era. 

Households where Spanish is the primary language are far more likely to rely on 

over-the-air television than other households. Nationally, 43 percent of households 

where Spanish is the primary language spoken watch over-the-air television exclusively. At the same time, analysis of the consumer market reveals that digital television technology has failed to make significant inroads into the Hispanic community. Nielsen data indicates that the use of DTV receivers in Hispanic households 

nationally is the lowest among all consumer groups. As a result, if Congress fails 

to produce a final DTV transition plan that focuses on extending the benefits of 

DTV to all consumers, Spanish language television viewers will be subject to a disproportionate share of the resulting harm. In short, we really need the Congress to 

get the DTV transition RIGHT. 

Getting it right means ensuring that Spanish-speaking consumers have access to 

the revolutionary benefits that digital television offers, especially high-definition television programming and multicasting. It also means that our audiences are not 

disenfranchised, whether they rely on over-the-air broadcasting, cable, or satellite 

for their television. The disruption and cost accompanying the DTV transition must 

be kept to a minimum. 

As this committee works to craft digital television transition legislation, it is critical to strike a balance between the need to bring the digital television transition 

to a close, while also protecting the overwhelming majority of consumers who still 

only have analog television sets, and ensuring that the exciting new services that 

digital technologies enables are available and enjoyed by all consumers, especially 

minority and lower-income consumers. 

Telemundo supports a hard cut-off date for ending analog broadcasts. But setting 

a hard deadline remains only one piece of the puzzle. Several other components also 

must be addressed—simultaneously—in order to ensure that the transition to digital television is one that consumers will view as a net gain and not a net loss. For 

instance, the millions of consumers who rely exclusively on over-the-air broadcasting—many of whom are Hispanic and lower-income—must have some Federal 

support for their purchase of equipment that will ensure their sets do not go black 

the day analog broadcasts cease. These consumers, as well as those receiving local 

broadcast signals via cable or satellite, also cannot be denied the full value and 

suite of benefits offered by digital television—this especially includes additional free 

digital channels that broadcasters provide, and HDTV without degradation. Finally, 

especially if a hard deadline is set, every stakeholder has a responsibility—actually, 

I believe it’s more of an opportunity—to educate every American about the transition and what they need to know to make it themselves. I address each of these 

issues briefly below. 

A Subsidy Is Needed for Consumers To Purchase Digital-to-Analog 

Converters 

There has been much discussion of the need for some form of Federal assistance 

to consumers—especially those, like many Hispanic and lower-income citizens, who 

rely exclusively on over-the-air broadcasting—who will need to purchase additional 

equipment to receive digital television signals. While Telemundo is not suggesting 

any particular approach, we do support the inclusion of a consumer assistance program that, at a minimum, ensures that households exclusively reliant on over-theair broadcasting are not literally left in the dark once analog television is shut off. 

As I previously noted, failure to include a consumer assistance program in DTV legislation will have a disproportionately negative impact on Spanish language households, who are not currently purchasing DTV products, and who will be hit hardest 

when the final cut-off date arrives. A subsidy program to defray the costs of a digital-to-analog converter box is a necessity in any mandated end to the digital television transition. 

MVPD Carriage of Digital Multicast Programming Is Essential 

Digital television enables broadcasters to offer four or more programming channels in place of their one analog channel without using any additional spectrum. 

Multicasting allows broadcasters to serve their local communities better than ever 

before by providing multiple streams of locally-produced or community-oriented programs, including but not limited to: ‘‘hyper-local’’ news, covering smaller parts of 

large metropolitan areas, programming that covers local political issues and candidates; newscasts that serve specific segments of the local market; local events, including school and amateur sports activities; and local weather, traffic, and emergency information. 

19 

In this time of heightened alert against terrorism, local broadcast stations are the 

first providers of emergency news and information to the public concerning not only 

actual or potential terror threats to public safety, but also local emergency incidents 

such as chemical spills, dangerous storms, floods, escaped prisoners, and similar incidents of urgent import. Multicast channels permit the rapid dissemination of such 

information in much greater detail by enabling stations to target information for 

particular communities on particular streams. 

Beyond emergency or local information, the increasingly diverse character of 

American society makes the availability of Spanish language, local television programming critically important in permitting Spanish language speaking residents 

to become better integrated into, and function more effectively in the communities 

in which they reside. Multicasting increases the ability of broadcast stations to 

transmit Spanish language programming to Spanish speaking populations within 

their service area. Absent a meaningful must-carry requirement that includes 

multicast carriage, this digital dividend will be sacrificed. 

Telemundo and other broadcasters cannot avail themselves of the powerful benefits of multicasting in the marketplace absent cable and satellite carriage of 

multicast programming channels. Broadcast television in any language is advertiser 

supported, and our ability to attract advertising dollars is directly tied to the number of viewers we have the opportunity to attract to our programming. The majority 

of all television viewers watch broadcast television via cable or satellite, and if those 

services do not carry multicast programming services the overwhelming majority of 

television viewers will not have the opportunity to see them. 

As a result, the fundamental basis upon which must-carry has been traditionally 

supported by Congress—the preservation of free over-the-air television—is critical 

in the context of multicasting. Absent Congressional support for multicast mustcarry, Telemundo and other Spanish language broadcasters will have no economic 

model upon which to rely to offer Spanish language viewers new and innovative 

multicast programming services. As Congress is requiring millions of consumers to 

invest in new digital equipment in order to watch television, it will simultaneously 

be depriving them of one of the most important benefits they will receive for their 

purchases. Failure to include multicast must-carry in a final DTV transition bill 

strikes at the core of the critical balance between reward and risk, upon which the 

success of the DTV transition rests. 

Consumers Must Have Access to DTV Signals in Un-Degraded Form 

A conversion to DTV that requires consumers to purchase new equipment, and 

yet diminishes or denies consumers’ access to HDTV—a paramount benefit of digital 

television technology—makes absolutely no sense at all. Multichannel video programming providers must be required to retransmit any and all broadcast signals— 

including high definition programming—in its original format and quality to all subscribers. Moreover, any DTV transition legislation should require that digital broadcast signals be carried on a basic tier of service. Both of these requirements serve 

consumers of pay television services well because they will ensure they can receive 

one of the principal benefits of DTV technology—the glorious video and audio quality of high definition—at affordable rates. 

If Cable Operators Are Given Flexibility To ‘‘Down-Convert,’’ They Must Be 

Required To Do So on a Nondiscriminatory Basis 

Should a cable operator wish to downconvert a digital signal at the cable headend 

to ensure continued service to analog cable subscribers, it should be permitted to 

do so only so long as the cable operator also provides an undegraded digital signal 

on the same tier as that down-converted signal. However, if a cable operator avails 

itself of this option, it must be required do so on a nondiscriminatory basis. Absent 

such a requirement, a cable operator could choose to provide an analog feed of only 

the top network affiliates its carries, and leave in the lurch the viewers of smaller, 

religious and foreign-language broadcast channels, including Telemundo. This would 

make us unacceptably vulnerable to losing our analog cable subscribers unless cable 

operators decide to give all analog cable subscribers a set top box. Don’t bet on that. 

Cable industry leaders have repeatedly stated that they do not want to disrupt 

analog cable subscribers as the DTV conversion occurs. All we are saying, to quote 

President Reagan, is: ‘‘Trust, but verify.’’ 

Consumer Education 

Finally, a hugely important component of any DTV transition legislation must be 

consumer education—every stakeholder: retailers, manufacturers, cable operators, 

and, of course, local broadcasters and broadcast networks, must significantly ratchet 

up their efforts to inform consumers about the impending shut off of analog teleVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
20 

vision, and their need to purchase digital tuning equipment in order to continue to 

receive free broadcast services. 

This must be done as soon as possible. It must be well-coordinated, understandable to the average citizen, and ubiquitous. In particular, Telemundo believes it is 

critical that consumers considering the purchase of an analog-only television be informed at the point-of-purchase—by the retailer or other seller, whether in a brickand-mortar retail store or a website, and by manufacturers, through a product label, 

about the conversion date, the need for digital tuning capability, and the potential 

limitations of analog-only equipment. 

I appreciate the opportunity to appear before you today, and share with you concerns of Spanish speaking Americans who have much to gain but also much to lose 

in the digital television transition. I stand ready to work with each Member of this 

Committee to ensure that final digital television transition legislation serves the interests of our Nation and of all television viewers. 

The CHAIRMAN. Our next witness is Kyle McSlarrow, President 

and CEO of the National Cable & Telecommunications Association. 

STATEMENT OF KYLE MCSLARROW, PRESIDENT/CEO, 

NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION 

(NCTA) 

Mr. MCSLARROW. Mr. Chairman, Mr. Co-Chairman, members of 

the Committee, I appreciate your invitation to appear here today. 

I applaud your committee’s leadership to address the return of 

the analog spectrum from broadcasters, particularly for public-safety purposes. That is why, Mr. Chairman, when you asked us for 

our assistance we committed to provide a constructive solution for 

cable customers. 

Our proposed solution is to provide cable operators the flexibility, 

once the analog spectrum has been returned, to down-convert the 

digital signals from must-carry broadcasters. What this means, as 

a practical matter, is that the over-40-million cable customers who 

can only receive an analog service will enjoy the same service the 

day after the transition that they received the day before. It means 

that many stations, including public television stations, network affiliates, and other stations that have negotiated agreements with 

the cable industry, would be carried in digital, just as they are 

today. It means that those of our customers who have the capability to receive high-definition television signals will continue to 

receive increasing numbers of high-definition channels from among 

the 23 cable networks offering high definition, and many commercial and public broadcasters, as well. And, though it will cost the 

cable industry tens of millions of dollars to re-engineer our facilities to provide for down-conversion, it won’t cost the government a 

dime. But, instead of embracing this solution, the broadcasters continue to ask you for special favors. 

Mr. Chairman, the broadcasters are urging you to impose requirements on the cable industry that they have repeatedly failed 

to convince Congress and the FCC to impose and that would be unconstitutional under the Turner line of Supreme Court cases. 

The most plausible interpretation is that the broadcasters hope 

to goad the cable industry into joining them in their passive-aggressive opposition to a hard date. Perhaps a more charitable interpretation is, they view this as one more opportunity to make a land 

grab. In any event, they are making your task harder, not easier. 

Broadcasters are not the only ones in America making the transition to digital, and they should not be given preferential treatment 

21 

in a competitive marketplace, especially by government mandate. 

However they describe it, what they’re asking for is obvious: government-mandated carriage of both an analog and a digital version 

of the same signal, and carriage of multiple streams of programming. 

The broadcasters seem not to understand that cable, in addition 

to being a television provider, is also the largest broadband provider in the United States. We have one pipe, upgraded with 

fiberoptic technology, with very robust capacity, but it is not unlimited. By law, we already have to offer public access and other public educational and governmental video programming. We also have 

to offer carriage to every broadcaster who chooses must-carry. We 

offer increasing numbers of digital and high-definition programming. And that one cable connection to the home allows us to offer 

not just linear channels of video, we plan to offer video-on-demand, 

including high-definition video-on-demand. That one cable connection allows us to offer highspeed Internet services. It allows us to 

offer circuit-switch telephone services and, increasingly, Voice-overInternet-protocol telephone service. That pipe also allows us to pass 

data back and forth for current and new applications of two-way 

services. 

All of this requires a lot of capacity, but we are in an incredibly 

competitive market. We have to continue innovating. So, for example, in the next few years we plan to offer Internet speeds of up 

to 160 megabits per second, compared with the average of, say, 5 

megabits per second today. That is the kind of broadband deployment that most of the members of this committee want to see deployed. But to do that means we have to use from four to eight 

times the bandwidth, or capacity, as we do today to deliver this 

next generation of high-speed Internet service. 

That kind of innovation doesn’t just happen; it requires a regulatory framework that provides certainty and that rewards investment. And the kind of investment we have made, nearly $100 billion over the least 10 years, is what it took to put us in this position. That kind of investment will not happen if someone can just 

come off the sidelines and take capacity for themselves. If that happens, innovation will suffer, because some services won’t stay on 

our pipe, and some services will never make it on. That is precisely 

the kind of choice about innovation and services that a free market 

should determine, not a government mandate. 

Mr. Chairman, I would just make one final point. This committee 

can discharge its responsibilities and advance public safety without 

wading into this morass. Nothing the broadcasters have proposed 

has the slightest bearing on how you can best ensure the return 

of the spectrum, and how you can do so with a minimum of inconvenience to consumers. 

We have tried to provide you a sensible approach to assist your 

efforts, and we look forward, Mr. Chairman, to continuing to work 

with you and members of this committee on this important legislation. 

Thank you. 

[The prepared statement of Mr. McSlarrow follows:] 

22 

1 In 2002, the cable industry was the first to embrace then-FCC Chairman Powell’s call for 

voluntary industry action to speed the digital television transition. Ten top cable operators— 

AT&T Broadband, AOL Time Warner, Comcast, Charter Communications, Cox Communications, 

Adelphia Communications, Cablevision Systems, Mediacom Communications, Insight Communications, and CableOne—pledged to support the DTV transition by: (1) carrying a complement 

of commercial and public television stations and cable program networks that offered HDTV programming, (2) offering value-added DTV programming that would create an incentive for consumers to purchase DTV sets, (3) placing orders for integrated HD set-top boxes with digital 

connectors, and (4) providing these boxes to customers who requested them. 

PREPARED STATEMENT OF KYLE MCSLARROW, PRESIDENT/CEO, 

NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION (NCTA) 

Introduction 

Mr. Chairman, Mr. Co-Chairman, members of the Committee, my name is Kyle 

McSlarrow. I am the President and CEO of the National Cable & Telecommunications Association, and it is a privilege to appear before you today. NCTA is the 

principal trade association for the cable television industry in the United States. It 

represents cable operators serving more than 90 percent of the Nation’s 66 million 

cable television households and more than 200 cable program networks, as well as 

equipment suppliers and providers of ancillary services to the cable industry. 

I appreciate your invitation to testify on pending Congressional efforts to speed 

the transition to digital television. As I have mentioned during our listening sessions with this committee, cable is at the forefront of the digital revolution and was 

the first industry to deliver on the promises of the 1996 Telecommunications Act, 

including high-speed access to the Internet and facilities-based competition for the 

telephone companies. Cable was also the first in 2002 to respond to the FCC’s calls 

for assistance in expediting the broadcasters’ transition to digital television.1

Mr. Chairman, while the cable industry has taken no formal position on a ‘‘hard 

date’’ for the broadcasters’ return of the analog spectrum, we understand and applaud your committee’s leadership in grappling with the important policies inherent 

in the return of that spectrum, particularly for public safety purposes. 

That is why when you asked us for our assistance, we committed to providing a 

constructive solution for an early return of the spectrum that would ensure all cable 

customers would face a seamless transition at no cost to the government. 

Our solution is to provide cable operators the flexibility, once the analog spectrum 

has been returned, to ‘‘down-convert’’ the digital signals from must-carry broadcasters at the cable headend. 

What this means, as a practical matter, is that the over 40 million cable customers who can only receive an analog service will not lose access to must-carry stations, and will enjoy the same service the day after the transition that they received 

the day before. 

It means that many stations—including public television stations, network affiliates, and other stations that have negotiated retransmission consent agreements 

with the cable industry—would be carried in digital as well, just as they are today. 

It means that those of our customers who have the capability to receive high definition television signals will continue to receive increasing numbers of high definition channels from among the 23 cable networks offering high definition and many 

commercial and public broadcasters as well. 

And, although it will cost the cable industry tens of millions of dollars to re-engineer our facilities to provide down-conversion, it won’t cost the government a dime. 

Our solution is straightforward. Our solution does not attempt to make other industries’ businesses more difficult. And our solution allows this committee, and Congress, to concentrate on how to address those Americans who only receive over-theair video programming. 

But instead of embracing our down-conversion solution, the broadcasters continue 

to ask for special favors. 

Mr. Chairman, the broadcasters are urging you to impose requirements on the 

cable industry that they have repeatedly failed to convince Congress and the FCC 

to impose, and that would be unconstitutional under the Turner line of Supreme 

Court cases. 

Broadcasters are not the only ones in America making the transition to digital, 

and they should not be given preferential treatment in a competitive marketplace— 

especially by government mandate. 

Whether the proposal is called ‘‘either/or,’’ or down-conversion ‘‘in addition’’ to digital must-carry, what they are asking for is obvious: carriage of both an analog and 

a digital version of the same signal. But dual must-carry—and multicast mustcarry, another one of the broadcasters’ proposals—will do nothing to forward the 

23 

2 In return for deregulation, the cable industry promised Congress and American consumers 

that it would provide: (1) facilities-based competition to the telephone companies, and (2) a new 

generation of advanced information and video services—both of which we have done. 3The cable industry is rapidly rolling out high definition programming. As of January 1, 2005, 

cable companies had launched high definition television service on systems passing 92 million 

homes. At least one cable operator in all of the top 100 markets now offers HDTV, and HD over 

cable is available in 184 of the 210 U.S. television markets. 4 Including Cinemax HDTV, Comcast SportsNet HDTV, Discovery HD Theater, ESPN HD, 

ESPN2 HD, FSN HD, HBO HD, HDNet, HDNet Movies, INHD, INHD2, MSG Networks in HD, 

NBA TV, NFL Network HD, Outdoor Channel 2 HD, Showtime HD, Spice HD, STARZ! HDTV, 

The Movie Channel HD, TNT in HD, Universal HD, and YES–HD. 

digital transition and harms consumers, cable operators, and cable programmers 

alike. 

The broadcasters’ attempts to appropriate additional channel capacity on cable 

systems through dual and multicast must-carry will harm consumers by slowing the 

deployment of broadband and a host of other new digital services. The reason is 

simple: these services—such as 100+ megabits per second Internet access, VoIP telephone service, and digital programming tiers—all compete for a finite amount of 

space on cable systems. The more the broadcasters get, the less capacity there is 

for innovative new applications sought by our customers. 

Awarding the broadcasters dual or multicast must-carry rights would do nothing 

to further ensure the viability of programming from a multiplicity of sources. It 

would, however, use valuable capacity on cable systems that would otherwise be 

available to cable operators and non-broadcast cable program networks to offer the 

array of services that provides the greatest value to consumers. Both dual mustcarry and multicast must-carry are at odds with fundamental First Amendment and 

Fifth Amendment rights, and do not pass muster from either a public policy or legal 

standpoint. 

However, this committee can discharge its responsibilities and advance public 

safety without wading into this morass. Current law, which gives broadcasters the 

right to mandatory carriage of their primary digital video stream after the transition is complete and the broadcasters are transmitting exclusively in digital, presumes a world in which the vast majority of consumers have digital televisions. An 

early return of the spectrum before most customers have purchased TVs with digital 

tuner changes that picture and requires a little flexibility. If you adopt our downconversion proposal, you can guarantee that 66 million cable households will have 

access to the same programming the day after the transition as the day before. You 

will also allow the cable industry to continue to rollout broadband services and serve 

greater numbers of customers with digital and high definition programming. 

The Cable Industry Is Leading the Broader National Transition to the 

Digital Age 

In the United States, the broadcasters’ transition from analog to digital is only 

a small part of the larger digital transition that is occurring in every area of our 

Nation’s economy. Since 1996, when Congress enabled cable’s investment in new 

technology and programming by substantially reducing regulation, cable operators 

have nearly rebuilt their facilities.2 With an investment of almost $100 billion, operators have replaced coaxial cable with fiber optic technology, and installed new digital equipment in homes and system headends, thus enabling the transmission of 

voice, video, and Internet services in digital format. As a result, cable customers are 

already enjoying a full complement of digital programming and advanced information services independently of the broadcasters’ conversion to digital. 

For example, cable customers can purchase digital programming tiers that include 

a diverse array of video networks and commercial-free music channels. Digital customers also have access to video-on-demand programming, digital video recording, 

and enhanced electronic program guides. These features allow programs to be 

viewed at the customer’s convenience and at a time of the customer’s choosing. They 

also allow cable subscribers to block access to programming they do not want their 

children or households to see. All of cable’s digital services can be enjoyed by consumers with analog TV sets who use digital set-top boxes that convert digital signals to analog. More innovative interactive video services are on the way, in addition to the Internet and digital telephone services that are already attracting large 

numbers of customers. 

Cable customers with high definition TV (HDTV) sets have even more options.3

They can receive a wide selection of programming transmitted in high definition, including 23 HD cable networks that transmit much of their programming in high definition.4 In addition, cable operators are now voluntarily carrying the digital chanVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00027 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
24 

5 As of January 1, 2005, cable operators voluntarily carried 504 digital broadcast signals—a 

66 percent increase over the 304 stations carried in December 2003. 6On January 31, 2005, NCTA reached agreement with the Association of Public Television 

Stations (APTS) to ensure that the digital programming offered by local public TV stations is 

carried on systems serving the vast majority of cable subscribers across the Nation. The boards 

of NCTA, APTS, and PBS ratified the agreement on February 4, 2005. 7There are approximately 172 million television sets in the 66 million cable households across 

the country. 26 million cable homes subscribe to digital service, but not all digital households 

have digital boxes on all their TVs. This means that there are approximately 28 million analog 

TVs in digital homes that will require boxes after the transition. If one adds these 28 million 

sets to the approximately 106 million analog TVs in homes with only analog cable service (41 

million), there are a total of around 134 million analog TV sets in cable homes that will require 

digital boxes in order to get digital service. The cost of deploying 134 million set-top boxes is 

$9 billion for a simple $67 digital-to-analog box and $29 billion for a $200 interactive digital 

cable box. 8 In re Carriage of Digital Television Broadcast Signals, First Report and Order and Further 

Notice of Proposed Rulemaking, 16 FCC Rcd. 2598, 2629 (2001) (emphasis added). 

nels of a substantial number of over-the-air broadcast stations in addition to those 

stations’ analog signals—either through retransmission consent agreements with individual commercial stations 5 or voluntary initiatives such as cable’s recent carriage 

agreement with public television stations.6 Significantly, cable’s contractual carriage 

agreement with public television stations was reached through private negotiations—not Federal legislation or FCC regulations. 

Cable’s Carriage of Broadcast Signals Today 

The vast majority of cable customers have analog television sets, and most of 

those sets—as in over-the-air households—are not equipped with digital set-top 

boxes.7 Today, cable operators provide the analog signals of virtually all local television stations, which can be viewed by all customers—those with and without digital boxes, and those with and without digital television sets. In addition, operators 

provide the digital signals of some, but not all, broadcast stations—especially those 

that provide compelling digital programming that is likely to enhance the value of 

cable service for the growing number of customers with high definition sets. 

Cable’s current carriage practices fully comply with what both the marketplace 

and the ‘‘must-carry’’ rules dictate. Existing law requires cable operators to carry 

the analog signals of all ‘‘must-carry’’ broadcast stations during the digital transition, while making carriage of the digital signals optional and subject to ‘‘retransmission consent’’ agreements with broadcasters. The FCC has recognized that requiring ‘‘dual carriage’’ of the analog and digital signals of all must-carry stations— 

regardless of whether the digital programming is valuable to the cable households 

capable of viewing it on their TV sets—would do nothing to further the purposes 

of the must-carry requirements, or the digital transition while unduly burdening the 

First Amendment rights of cable operators and programmers. 

This sensible balance, which serves the interests of must-carry broadcasters, cable 

operators, cable programmers, and cable customers alike, can be preserved without 

any disruption to cable customers after broadcasters stop transmitting analog signals—with one key adjustment. Current law requires cable operators to carry mustcarry signals without ‘‘material degradation.’’ The FCC has interpreted this to mean 

that—after the transition, when broadcasters are transmitting only in digital—‘‘a broadcast signal delivered in HDTV must be carried in HDTV.’’ 8 This ‘‘no material 

degradation’’ requirement makes sense if—as is the case under current law—the 

transition to digital-only broadcasting does not occur until most households are 

equipped to receive digital signals on their television sets. However, if Congress is 

going to impose a ‘‘hard date’’ before most consumers have digital sets or set-top 

boxes, then the requirement to transmit the broadcasters’ digital signals in ‘‘un-degraded’’ digital format will be costly and disruptive for cable customers who do not 

have digital TVs or set-top boxes, i.e., most of our subscribers. It will require them 

to acquire digital sets or set-top boxes to continue watching the same broadcast programming that they watch today. 

To prevent this costly disruption, Congress should allow cable operators to ‘‘downconvert’’ the digital signals of must-carry broadcasters to analog at the headend and 

provide the primary video programming stream of those down-converted signals to 

cable homes in lieu of the primary digital video stream. This will ensure that all 

cable households can receive the programming provided by those must-carry broadcasters without having to purchase digital television sets or digital set-top boxes. 

Households with HDTV sets would, of course, be able to watch the increasing 

number of HD channels, as they do now. I would note that cable operators would 

still have every incentive to voluntarily provide the digital signal—as they frequently do today—in addition to the down-converted analog signal if the digital 

25 

9While S. 1268 establishes a baseline digital carriage requirement with respect to any mustcarry station that relinquishes its analog spectrum, it gives cable operators the flexibility to convert digital signals to analog at the headend ‘‘notwithstanding’’ this baseline requirement. 

version were uniquely compelling and attractive to customers with digital and 

HDTV equipment. As a result, a ‘‘hard date’’ transition to digital broadcasting would 

be seamless and non-disruptive for cable customers. 

Today, we offer analog to our analog customers, analog and digital to our digital 

customers, and increasingly the opportunity for customers with high definition sets 

to watch a growing number of channels in high definition. In addition, many of our 

operators have already announced their own plans to simulcast analog channels in 

digital. And what is true today will still be true the day after the transition under 

our proposal. In the meantime, increasing numbers of our subscribers will continue 

to switch to digital services, and many of them will become high definition subscribers. We believe our proposal minimizes costs and inconvenience to consumers, 

and allows you as policy-makers not to have to worry about disrupting anyone who 

is a cable customer—and to do so at no cost to the government. 

We are pleased to see that the SAVE LIVES Act (S. 1268), introduced by Senators 

McCain and Lieberman, appears to recognize the consumer benefits of permitting 

down-conversion in lieu of digital carriage.9 While we have concerns about the bill’s 

‘‘convert one-convert all’’ obligation on any operator who chooses to down-convert, 

the bill recognizes that this obligation should end when it is no longer necessary 

to ensure the continued ability of audiences for foreign-language and religious television broadcast stations to view the signals of such stations. Finally, the bill also 

recognizes that only a single digital program stream from each broadcaster should 

be entitled to carriage on a cable operator’s basic service tier. Thus, S. 1268 offers 

a sound starting point for crafting a digital transition bill that best serves the interests of consumers and is fair to all of the affected industries. 

Dual and Multicasting Must Carry Are Likely To Be Found Unconstitutional 

A. Down-Conversion and Dual Carriage 

Cable operators seek authority to fulfill their must-carry obligations in some cases 

by carrying a down-converted analog signal in lieu of a broadcaster’s digital signal. 

Some commercial broadcasters are insisting, however, that cable operators be permitted to carry down-converted analog versions of their digital signals only in addition to—not instead of—the original signals. This would effectively impose a dual 

carriage obligation if operators wanted to make broadcast signals readily available 

to the majority of their customers who do not have digital equipment—as they 

would obviously have to do. Any such dual carriage requirement would impose untenable burdens on cable operators and programmers alike and should be rejected. 

• By preempting an excessive amount of capacity on cable systems, dual carriage 

would interfere with the ability of cable operators to offer consumers the broadest array of programming, and to deploy broadband and innovative digital services. 

• Dual must-carry would be especially unfair to non-broadcast program networks 

(such as A&E’s Biography Channel, C–SPAN, Discovery Kids Channel, Hallmark Channel, The Outdoor Channel, Oxygen, Sı ́ TV, and TV One), which have 

no guarantee that their programming will be carried in analog or digital format—much less in both. 

As the FCC has determined, imposing such burdens on cable operators’ and programmers’ speech would raise serious Constitutional problems, because it would not 

advance the governmental interests identified by the Supreme Court as justifications for ‘‘must-carry’’ rules—or any other valid government interest. Specifically, 

• Dual carriage will do nothing to preserve or enhance the availability or quality 

of broadcast signals available to over-the-air viewers. To the contrary, guaranteed carriage of a broadcaster’s signal in analog and digital format will diminish 

the broadcaster’s incentive to provide programming that is uniquely compelling 

in its digital format, e.g., HDTV. 

• Dual carriage will do nothing to promote the dissemination of information from 

a multiplicity of sources since the two channels would simply be digital and 

down-converted analog versions of the same programming. Indeed, it would have 

the opposite effect: it would decrease the multiplicity of voices by granting preferential treatment to one broadcaster over different programming from other 

sources. 

26 

10See, for example, ‘‘Completion of the Digital Television Transition’’ (June 24, 2005), a paper 

being circulated in Congress by the National Association of Broadcasters. 11See Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180, 225 (1997) (Breyer, J., concurring in part) (‘‘I join the opinion of the Court except insofar as [it] relies on an anticompetitive 

rationale.’’) 

• Dual carriage will do nothing to promote the purchase of digital sets by consumers or set-top boxes by cable operators since cable systems already provide 

a broad array of digital and high definition programming (both broadcast and 

non-broadcast). In these circumstances, the additional carriage of must-carry 

broadcast stations in digital format will provide no additional incentive to cable 

customers to purchase digital equipment. 

Not surprisingly, the FCC has voted twice (by a margin of 5–0 in 2005) that dual 

carriage would raise serious First Amendment problems, and should not be imposed 

under the current must-carry statute. Changing the law to allow cable operators to 

carry down-converted analog versions in lieu of digital versions of must-carry signals makes good sense. But changing the law in a manner that effectively requires 

cable operators to carry must-carry signals in both digital and analog formats would 

not only be counterproductive and contrary to the public interest, it would be unconstitutional as well. 

B. Multicast Must Carry 

If Congress grants cable the authority to fulfill its must-carry obligations by carrying down-converted analog signals, all cable customers will be able to watch those 

signals—the same channels of programming that we are required to carry today— 

without having to acquire additional set-top boxes or new digital television sets. 

Meanwhile, cable operators would continue, voluntarily, and pursuant to retransmission consent, to carry additional digital signals from broadcasters who provide 

compelling high definition and multicast programming that is attractive to cable 

customers. 

But commercial broadcasters are continuing to urge Congress to force cable operators to carry every digital multicast channel from every must-carry broadcast station. 10 Never mind that they failed to persuade the FCC that such a requirement 

was in any way necessary to preserve the viability and availability of over-the-air 

broadcast stations, or that it would promote the availability of broadcast programming from a variety of sources. The broadcasters also failed to persuade the FCC 

that such a requirement could be implemented without burdening cable operators 

and programmers in a way that raised serious Constitutional problems. But broadcasters are now hoping that the same arguments that failed to persuade the Commission will somehow prove persuasive here. 

There is no reason why they should. A multicast must-carry requirement would force cable operators to use channel capacity that they spent nearly $100 billion deploying (so that they could offer compelling programming and advanced broadband 

services) to carry the broadcasters’ multicast programming instead. While this 

trade-off would reduce the value of cable service to cable customers, it would do 

nothing to preserve the availability—and would be more likely to diminish the quality—of over-the-air television from a multiplicity of sources. 

First of all, we should put to rest the notion, which the broadcasters keep resuscitating, that cable operators have anticompetitive reasons for refusing to carry the 

broadcasters’ multicast programming—even if consumers find it attractive. In 1992, 

when Congress enacted the current must-carry provisions, it worried that such discrimination might occur with respect to the broadcasters’ analog signals. But when 

the Supreme Court narrowly upheld (5–4) the Constitutionality of analog mustcarry, a majority of the Court found that this was not a supportable justification 

for the rules.11

Whatever fears Congress may have had in 1992, the subsequent launch of two 

vigorous and successful national direct broadcast satellite (DBS) services has removed any likelihood that a cable operator could profitably refuse to carry a programming service—broadcast or non-broadcast—that would attract a significant 

viewership and might be carried by its competitors. The Supreme Court found no 

basis for such fears in 1997, and today, with satellite competition stronger than 

ever, the prospect of anticompetitive conduct by cable operators is even more remote. As an argument for multicast must-carry, it is a red herring. 

In fact, where broadcasters are currently offering compelling digital content, cable 

operators are voluntarily agreeing to carry such programming. At present, cable operators have agreed to carry the digital signals of over 500 unique broadcast stations, and this includes not only HDTV signals but also multicast streams. Of 

course, operators continue to carry the broadcasters’ analog channels as well. 

27 

12 In at least one additional top 10 television market, cable carried the multicast signal of the 

recent NCAA men college basketball tournament games. 13 In remanding the case, the Court made clear that it is not sufficient merely to assert that 

must-carry rules are necessary to prevent some hypothetical harm: ‘‘That the Government’s asserted interests are important in the abstract does not mean, however, that the must-carry rules 

will in fact advance those interests. When the Government defends a regulation on speech as 

a means to redress past harms or prevent anticipated harms, it must do more than simply ‘posit 

the existence of the disease sought to be cured.’ Quincy Cable TV, Inc. v. FCC, 768 F. 2d 1434, 

1455 (CADC 1985). It must demonstrate that the recited harms are real, not merely conjectural, 

and that the regulation will in fact alleviate these harms in a direct and material way.’’ Turner 

Broadcasting System, Inc. v. FCC, 512 U.S. 622, 664 (1994). 14 Carriage of Digital Television Broadcast Signals: Amendments to Part 76 of the Commission’s Rules, Second Report and Order and First Order on Reconsideration, 20 FCC Rcd. 4516, 

4534–35 (2005) (footnotes omitted) (‘‘Second Report and Order’’). 

• As of May 2005, cable operators were carrying commercial broadcasters’ 

multicast programming in over 50 markets ranging from many of the Nation’s 

largest (including at least 7 of the top 10 markets) 12 to numerous small to midsized markets across the country. For example, in the Washington metropolitan 

area, Comcast is carrying WJLA’s local Weather Now channel (ABC) and WRC’s 

Weather Plus channel (NBC), as well as WETA’s Prime, Kids, and Plus channels (PBS). 

• In January 2005, NCTA and the Association of Public Television Stations 

(APTS) entered into an agreement that ensures that local public television stations’ digital programming—including multicast channels—is carried on cable 

systems serving the vast majority of cable customers across the Nation. 

• Comcast has digital carriage agreements with public broadcasters in at least 45 

markets, and has reached digital multicast carriage agreements with a growing 

number of commercial broadcasters for channels that Comcast believes bring 

value to its customers. 

• During the recent NCAA men’s college basketball tournament, CBS stations in 

a dozen markets offered—and cable operators agreed to carry—extra games on 

multicast channels. 

The Supreme Court found that the analog must-carry requirements were justified 

as a means for preserving the viability of over-the-air broadcast stations and the 

availability of programming from a multiplicity of sources. It found, after remanding 

the matter to the FCC to develop an extensive evidentiary record,13 that non-carriage of a broadcaster’s single analog channel would threaten the viability of a significant number of broadcasters, and therefore, threaten to reduce the diversity of 

programming sources available over-the-air. But there is no reason to believe that 

mandatory carriage of multiple program streams provided by every broadcaster is 

necessary to protect against such threats. 

Although the broadcasters persistently claim that a multicast must-carry requirement is essential to maintain their economic viability, they have not produced a 

shred of evidence demonstrating that this is the case. They certainly had ample opportunity to do so throughout the FCC’s lengthy rulemaking proceeding. Yet the 

Commission found nothing in the record to support their claim: 

Unlike in the analog carriage debate, here broadcasters fail to substantiate 

their claim that mandatory multicasting is essential to ensure station carriage 

or survival. Broadcasters argue that carriage of multicast streams is essential 

to help them develop and support additional programming streams, but they 

have not made the case on the current record that these additional programming streams are essential to preserve the benefits of a free, over-the-air television system for viewers. Broadcasters will continue to be afforded must-carry 

for their main video programming stream, which can be in standard definition 

or high definition, and any additional material that is considered program-related. Broadcasters can also rely on the marketplace working without mandatory carriage in order to persuade cable systems to carry additional streams of 

programming. There is evidence from the record, as well as news accounts, that 

cable operators are voluntarily carrying the multiple streams of programming 

of some broadcast stations, including public television stations, that are currently multicasting. . . . Under these circumstances, the interests of over-theair television viewers appear to remain protected.14

Indeed, while broadcast groups have argued that multicast carriage is especially 

vital to the survival of smaller and financially weaker broadcast stations, one independent broadcaster, Entravision Holdings, LLC, specifically told the FCC that it 

28 

15 ‘‘Why The Commission Should Not Promulgate A Digital Multicast Must-Carry Requirement At This Time Given The Harm Such A Decision Could Inflict On Independent Broadcasters’’ Ex Parte Filing of Entravision Holdings, LLC, CS Docket No. 98–120, March 1, 2004 

(emphasis added). 16 Id. 17Second Report and Order, supra, 20 FCC Rcd. at 4535 (footnote omitted). 

and other similarly situated independent broadcasters have little to gain—and much 

to lose—from a multicast must-carry requirement. According to Entravision: 

Network-affiliated broadcasters have characterized multicast services as an integral component of the future business plans of broadcasters, and as indispensable to a successful DTV transition and the continuing vitality of free over-theair television service. However, while digital multicast services may already be 

a reality for some network affiliates with the programming and financial resources to advance and support such technology, independent stations simply do 

not have access to the programming or the capital to invest in such technology 

at this time, or in the foreseeable future. 15

As a result, Entravision noted that ‘‘. . . multicasting will simply increase the 

power of network-affiliated stations and further diminish the ability of independent 

broadcasters to make their voices heard.’’ 16

As this broadcaster suggests, a multicast carriage requirement will not serve— 

and may actually disserve—the purpose of promoting the availability of programming from a variety of sources. The FCC itself found it hard to see how carriage 

of multiple streams from the same broadcast station could serve such a purpose: 

[B]ased on the current record, there is little to suggest that requiring cable operators to carry more than one programming stream of a digital television station would contribute to promoting ‘‘the widespread dissemination of information from a multiplicity of sources.’’ Under a single-channel must-carry requirement, broadcasters will have a presence on cable systems. Adding additional 

channels of the same broadcaster would not enhance source diversity. Furthermore, programming shifted from a broadcaster’s main channel to the same 

broadcaster’s multicast channel would not promote diversity of information 

sources. Indeed, mandatory multicast carriage would arguably diminish the 

ability of other, independent voices to be carried on the cable system. 17

Nor would a multicast carriage requirement do anything to promote the digital 

transition by accelerating the acquisition and use of digital equipment—television 

sets or set-top boxes—by cable customers. Cable customers already have access to 

hundreds of channels of programming, including many channels of high definition 

programming. It is unlikely that the availability of additional digital multicast programming will persuade any additional customers to acquire digital sets or set-top 

boxes. 

Since a multicast carriage requirement would not serve the purposes that justified 

the analog must-carry provisions—or any other important government policy—there 

is no basis, Constitutional or otherwise, for imposing the burdens of such a requirement on cable operators and programmers. 

But that does not deter the NAB, which asserts that mandatory carriage of 

multicast streams would not require any more capacity than is required of cable operators under current law, and would pose no Constitutional problems. The broadcasters’ claim is wrong, both as a matter of fact and as a matter of law. 

First, if Congress adopts a hard date that ends the transition before most cable 

customers have purchased digital television sets or digital set-top boxes, a multicast 

requirement almost certainly will take up more capacity than is currently used to 

carry broadcast stations. This is because cable operators will need to down-convert 

and carry each broadcaster’s primary video signal in analog format, using the same 

6 MHz they use today to carry such stations. Any requirement to carry additional 

digital multicast signals will add to this burden on cable’s capacity. 

Second, ‘‘current law’’ contemplates that broadcasters must return their free analog spectrum and that they are entitled to carriage of their one ‘‘primary’’ digital 

video signal after the transition. Adding a multicast carriage requirement to this obligation obviously increases the burden on a cable system’s capacity, and restricts 

an operator’s ability to deploy significant new services and applications that enhance the value of cable service to local consumers. 

In any event, the burden of a must-carry requirement, for Constitutional purposes, is not simply the physical amount of channel capacity an operator is required 

to devote to must-carry, but the extent to which must-carry obligations: (1) intrude 

on a cable operator’s editorial discretion to use his system’s capacity in a manner 

29 

that best serves viewers, and (2) discriminate against cable programmers who do 

not have the broadcasters’ preferential, guaranteed access to channels on a cable 

system. As I have mentioned, cable operators have invested nearly $100 billion in facility 

upgrades to bring a variety of new digital broadband services to their customers. 

Each channel that would have to be used to carry a must-carry stream of broadcast 

programming in lieu of some other service imposes an incremental burden that can 

only be justified if it advances an important government interest. 

Any multicast programming that is likely to be attractive to viewers will be—and 

is already being—carried by cable operators. But requiring cable operators to carry 

every multicast stream of every broadcast station would impose significant burdens 

on the speech rights of cable operators and cable program networks, and would disserve the interests of cable customers. Imposing a multicast requirement would 

raise serious Constitutional problems under the First Amendment. A multicast carriage requirement, like dual must-carry, would also raise serious Fifth Amendment 

problems. It would result in the permanent, physical occupation of a substantial 

portion of a cable operator’s system without just compensation—indeed, without any 

compensation at all. 

Conclusion 

Congress should reject the broadcasters’ renewed calls for digital must-carry, including dual must-carry and multicast must-carry. When the broadcasters suggest 

that they are not asking for dual must-carry but want ‘‘either/or’’ carriage or carriage of ‘‘just’’ their digital signal, policymakers should realize that these proposals 

are tantamount to dual must-carry. In what is still primarily an analog television 

world, cable companies cannot plausibly be expected to cutoff the bulk of their video 

customers by carrying only digital signals during the broadcasters’ transition to 

DTV. 

If Congress decides that the analog spectrum needs to be returned before most 

television viewers are equipped to receive digital signals, there is a way of minimizing consumer costs and service disruptions. Instead of permitting operators to 

carry down-converted signals in addition to mandated carriage of the digital signals 

transmitted by must-carry broadcasters, one need only to allow carriage of downconverted signals in lieu of the digital signals, while giving operators the discretion 

to carry both the down-converted and digital versions of the signal. Mandating dual 

carriage or multicast carriage would do nothing further to advance any legitimate 

public policy objective, and would only impose Constitutionally impermissible burdens on cable operators and cable program networks. 

I am grateful for this opportunity to discuss the transition to digital television 

with you. We look forward to continuing to work with this Committee on these important issues. 

The CHAIRMAN. Thank you very much. 

Our next witness is Mr. Patrick Knorr, Vice Chairman of the 

American Cable Association. 

Mr. Knorr? 

STATEMENT OF PATRICK KNORR, GENERAL MANAGER, 

SUNFLOWER BROADBAND; VICE CHAIRMAN, AMERICAN 

CABLE ASSOCIATION (ACA) 

Mr. KNORR. Thank you, Mr. Chairman, and members of the 

Committee. 

My name is Patrick Knorr, and I am General Manager of Sunflower Broadband, an independent cable business based in Lawrence, Kansas, currently serving 35,000 customers. 

Senator BURNS. Do you want to pull that microphone up? There 

you go. 

Mr. KNORR. Is that better? 

Senator BURNS. Pull it up closer to you. Is it on? 

Mr. KNORR. We provide cable television, digital cable, highspeed 

Internet, local phone service, digital video recorders, and other advanced services in eight smaller communities and rural areas 

throughout Northeast Kansas. 

30 

I’m also Vice Chairman of the American Cable Association, 

whose member companies provide cable and broadband service in 

rural areas in every state represented on the Committee. 

I believe you stand at a historic moment when we shift from the 

analog world to the exciting digital future. As you consider how 

best to address the DTV transition, there are two separate, but 

intertwined, sets of issues: first, the cost and the technical challenges with completing the transition, and, second, the problems 

with retransmission consent and programming practices. 

For the transition to be a success, it must work for all Americans, including those in more rural areas. The cost of the transition 

will have a disproportionate impact on rural customers and systems. ACA has some ideas on how to deal with this, and I’d like 

to highlight two. 

First, that cable operators need to have the flexibility to downconvert digital signals without the burden of mandated dual carriage. Smaller systems need this flexibility, because they cannot 

support the costly infrastructure necessary to provide these redundant channels. What may be more compelling for you is that, by 

facilitating down-conversion, it will minimize the cost of the transition by ensuring that the government will not have to put a box 

in every TV in every customer’s home. 

And, second, satellite-delivered local-to-local signals need to be 

available to rural cable operators on a nondiscriminatory basis. In 

some markets, digital signals will not be strong enough to reach 

the headend, meaning that viewers who previously could receive an 

analog signal are now left without a picture, a situation known as 

the ‘‘digital cliff.’’ The price of not fixing this problem is that many 

consumers in compliant systems will find themselves staring at 

blank TV screens. 

As for the second set of issues, outdated retransmission consent 

and programming rules must be addressed during this transition. 

Many of us are already seeing abusive behavior by big broadcasters 

as they exploit government-granted powers for their benefit. My 

company, like many ACA member companies, have invested millions of dollars to do its part to embrace the transition by upgrading systems to launch DTV, only to have some broadcasters use 

their market power to hold up retransmission consent. Some are 

demanding unreasonably high fees just to grant access to DTV signals, and, incredibly, others will not even have the courtesy to return our calls as we seek to carry those signals. 

And it gets worse, some broadcasters are now demanding substantial cash payments from smaller cable operators. Typically, I’m 

hearing demands of 50 cents to a dollar more per channel, which 

adds up to rate increases of two to five dollars per month for each 

subscriber for the same broadcast signals they receive today. In 

some markets, these demands are only made of the small operators. Big cable companies are paying nothing, while rural customers are being gouged for cash. The sole reason this can occur, 

broadcasters have market power granted to them by the laws and 

regulations of the analog era. I believe the intent of the retransmission consent laws were to protect localism, not to promote profiteering. This situation occurs for many reasons, but, most imporVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00034 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
31 

tantly, broadcasters use exclusivity to block cable operators from 

obtaining network signals at a lower cost. 

Fortunately, there are solutions to this problem, and I will suggest three here. One, eliminate exclusivity when a broadcaster 

elects retransmission consent and seeks additional consideration 

for carriage. Two, prohibit any party, including a network, from 

preventing a broadcast station from granting retransmission consent. And, three, to codify the retransmission consent conditions 

imposed on the NewsCorp/DIRECTV merger to apply to all retransmission consent agreements. 

In summary, the retransmission consent and broadcast exclusivity regulations have been used by the networks and stations to 

raise rates and force unwanted programming onto consumers. This 

must stop. But it won’t, unless Congress acts. 

Finally, I would encourage you to at least pierce the programming veil of secrecy by authorizing the FCC to obtain specific programming contracts and rate information in order to develop a programming price index. The PPI would be a simple, yet effective, 

way to gauge how programming rates rise and fall, while still protecting the proprietary elements of individual contracts. 

Mr. Chairman, this committee stands today at the threshold of 

a new digital world, but the challenges are many and the risks are 

great. Clearly, rural America and its service providers have unique 

financial and geographic challenges to face when making this conversion. Additionally, outdated regulatory structures that raise 

rates and force programming on our constituents must be abandoned. 

I hope that you will be able to address both of these problems, 

and I appreciate the opportunity to testify on ACA’s views. 

[The prepared statement of Mr. Knorr follows:] 

PREPARED STATEMENT OF PATRICK KNORR, GENERAL MANAGER, SUNFLOWER

BROADBAND; VICE CHAIRMAN, AMERICAN CABLE ASSOCIATION (ACA) 

Introduction 

Thank you, Mr. Chairman and members of the Committee. 

My name is Patrick Knorr, and I am General Manager of Sunflower Broadband, 

an independent cable business based in Lawrence, Kansas, currently serving 35,000 

customers. My company provides cable television, digital cable, high-speed Internet, 

local phone service, digital video recorders, and other advanced services in eight 

smaller systems and rural areas throughout Northeast Kansas. 

I am also the Vice Chairman of the American Cable Association. ACA represents 

nearly 1,100 smaller and medium-sized independent cable businesses. These companies do one thing—serve our customers, who are found in areas the bigger companies don’t serve. ACA members don’t own programming or content; nor are they run 

by the large media companies. Collectively, ACA members serve nearly 8 million 

customers, mostly in smaller markets. Our members serve customers in every state, 

particularly those of this committee. 

I believe you stand at an historic moment, when we shift from the 1970s-era policies of the analog world to the exciting and enticing future that the digital revolution can provide. All of us here today want our constituents and customers to receive the best in advanced, high-speed, digital services. The transition to digital television is an important step in the right direction. But at the same time, all of us 

here today want to ensure that no one is left behind as we actually move from analog to digital. 

As we look today at ideas and proposals concerning the transition to digital television, there are two realities this Committee must take into account. 

The first reality is that the transition to digital television is both a question of 

technology and of public policy—a reality recognized by the existence of this hearing 

and the very necessity of a DTV bill. Many very important and relevant public polVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00035 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
32 

icy issues exist today concerning the digital pipe and the content that flows through 

it. Issues such as ‘‘rising cable and satellite rates,’’ ‘‘media consolidation,’’ ‘‘indecency,’’ ‘‘retransmission consent abuse,’’ ‘‘family programming tiers’’ and the ‘‘Digital 

Divide,’’ cannot be viewed as separate from the DTV transition. In fact, these policy 

issues are the central focus of your constituents and our customers. Moving a limited DTV bill will only postpone and exacerbate marketplace, media, programming, 

and pricing problems that already exist back home in your districts. The transition 

from analog to digital, and the underlying need for legislation to facilitate that shift, 

provides you with the first appropriate opportunity to address these germane issues 

in a comprehensive manner, and I encourage you to take advantage of this moment. 

Digital platforms can provide consumers with a wondrous world of new and valuable programming. But if you allow the old rules to stay in place, it will just be 

more of the same. To move forward on just one technological aspect of the digital 

revolution without moving forward on the broader content and programming issues 

would be the equivalent of putting a fancy new engine in a rusty old car, thus severely limiting how far and how fast you can really go. To provide consumers with 

the greatest benefit, it is imperative that you break with the past and recognize that 

some old ideas no longer serve the greater good. 

I strongly urge this committee to seize this moment to restore the balance of 

power between programmers, operators, media consortiums, and broadcasters. In 

short, it’s time to recalibrate for the digital world so that each is subject to the creative power of competitive market forces and to the consumers they serve. 

Moving on to the second reality, DTV transition proposals that require dual carriage of broadcast signals will threaten ACA members’ very survival and ability to 

provide advanced services such as high-speed Internet, VoIP and VOD. Unless the 

specific financial realities of smaller, independent providers are addressed in any 

DTV bill, consumers and communities across America will lose access to signals and 

services they rely on today. In fact, what worries me is that without efforts to help 

these systems make the transition, many of the small businesses that provide video 

and broadband services in rural America will cease to exist, and the digital divide 

will actually grow. 

Out in the smaller communities ACA members serve, literally from Alaska to 

Maine, Hawaii and Florida, it is our core video business that allows us to finance 

and provide the high-speed services, including digital television, which everyone 

wants in order to bridge the Digital Divide. It is independent cable companies like 

mine that provide broadband services to small towns throughout the country. Satellite providers, telephone giants, or major cable companies—unlike ACA’s members—are not rushing to serve these communities, and I can appreciate why. Large 

companies will never come rushing into these communities because of the cost and 

difficulty of providing service in rural America. The headlines you read about in the 

media are about new services and suites of services offered to larger communities. 

If ACA members’ video service cannot survive, I can assure you we will not be 

around to offer the cable modem services these communities need, and the DTV 

services this committee wants. In short, video programming is not ‘‘just’’ about programming choices and rates, but it is also the foundation upon which advanced 

services, including DTV, are built. 

As a result, there are four fundamental and specific changes that must be made 

if your goal is to provide the greatest diversity of video, DTV and advanced services, 

and to ensure that all consumers—even in smaller markets and rural areas—have 

access to them. The four changes are: 

1. Ensure that consumers in smaller markets and rural areas are not left behind in the digital transition. Take into account and address the unique financial, technical, and operational requirements of those companies that will be 

providing DTV service in rural America. 

2. Update and change the current retransmission consent rules to help remedy 

the imbalance of power caused by media consolidation. 

3. Correct rules that allow for abusive behavior because of media consolidation 

and control of content. 

4. Make access to quality local-into-local television signals available. 

33 

What Needs To Be Changed and Why 

1. Ensure That Consumers in Smaller Markets and Rural Areas Are Not Left Behind 

in the Digital Transition—Take Into Account and Address the Unique Financial, 

Technical, and Operational Requirements of Those Companies That Will Be 

Providing DTV Service in Rural America 

Several current DTV legislative proposals would require cable operators to carry 

the primary digital signal of all broadcast stations, but allow the cable operator to 

also simultaneously down-convert certain commercial and educational stations to 

analog, and then require the cable operator to carry both digital and analog signals 

all on the broadcast basic tier. From the perspective of the independent cable operators serving rural America today, this is no choice at all for the following reasons: 

Dual Carriage. Independent cable operators in smaller markets and rural areas 

cannot afford the transition and equipment costs to transmit solely digital signals. 

They will need to down-convert digital signals to analog so that their subscribers 

in smaller markets and rural America will have a signal to receive. If dual carriage 

is the only option, most small systems will be unable to comply because of the limitations of their systems will prevent them from carrying those signals—the actual 

carrying capacity of the pipe into the home will be too small. In addition, the cost 

of just carrying the digital signal for most ACA members would be more than $1,000 

per subscriber. That’s a cost that many smaller systems cannot support. Additionally, such a solution would force every customer in my market to have a set-top box 

or new digital television set for every TV in the house. In short, the requirement 

for dual carriage of both the digital and analog signal will impose significant additional unrecoverable costs, and siphon off precious bandwidth used today to offer advanced communications services like high-speed Internet, VoIP, and VOD, to name 

a few. 

Hard Deadline. Current DTV proposals would impose a hard deadline of December 31, 2008, when all analog transmission by broadcast stations must cease. The 

‘‘hard deadline’’ for the digital transition will disproportionately impact ACA members in rural America and their subscribers in at least two ways: 

• Some ACA members in remote areas are subject to the ‘‘digital cliff’’ effect. 

When broadcasters turn off their analog signal these members will be unable 

to pick up any signal to retransmit to their subscribers because of the technical 

characteristics of the digital signal. If a cable operator cannot pick up the digital signal, its subscribers are even less likely to be able to pick up the off-air 

signal with a home antenna. 

• Cable subscribers in rural areas are less able to afford digital receivers or converters than subscribers in urban areas. 

Retransmission consent. As previously discussed, some broadcasters are already 

using their DTV signal as a lever to impose more tying demands and higher fees 

for retransmission consent on cable operators. In some cases, some of the largest 

broadcasters have ignored ACA members request for DTV retransmission consent. 

When a broadcaster refuses to grant consent to a smaller operator, or demands exorbitant fees or costly tying arrangements, this behavior impedes the DTV transition. The bill must address these problems to ensure the increased bandwidth available in the digital world will not just become increased opportunity for more unwanted programming and higher rates to be leveraged-down to consumers in rural 

America. 

Digital-to-analog conversion. ACA members support the concept of allowing the 

digital-to-analog conversion, without imposition of a dual carriage requirement. 

Such a decision would allow smaller systems to minimize the disruption to their 

consumers and would ensure our continued viability. Unfortunately, current DTV 

proposals will first require consumers to purchase new equipment. Second, these 

proposals will place an insurmountable economic burden on operators by forcing 

them to replace their networks. (See Exhibit 1) The simplest solution would be to 

give operators the flexibility to down-convert digital signals at the headend without 

the dual carry obligation. 

The stark reality is that ACA members, without changes to current DTV proposals that reflect their unique circumstances, face serious financial hardship. This 

means that consumers served by ACA members in most of the states represented 

on this committee may lose their provider and all of the advanced services these 

companies provide. 

Some may say that the loss in the marketplace of certain providers like ACA 

members is simply a function of survival-of-the-fittest. We would argue that rural 

America deserves competition in the video marketplace just like the rest of the 

country. They also deserve to experience the advanced services that bigger entities 

34 

are rushing to provide in more populated and profitable areas. The reality is that 

in the rural markets ACA member companies serve and operate, larger cable television providers will not fill in the service gaps if ACA members are forced to exit 

their business. 

Solutions to ensure no consumer, community, or provider are left behind in the 

DTV transition: 

• Provide the ability to down-convert digital signals to analog without the obligation for dual carriage; 

• Assist independent cable operators to upgrade facilities to avoid the digital cliff 

effect and to be able to receive and transmit DTV signals to their consumers; 

• Allow waivers of the carry-one-carry-all requirement to ease the burden on 

smaller operators; 

• Make adjustments to retransmission consent rules and exclusivity regulations. 

ACA and its members understand and support the need for the Committee to 

move swiftly to recapture analog spectrum for other noble purposes. However, we 

strongly caution the Committee to consider the real possibility of leaving consumers, 

and providers in smaller markets and rural America, out in the cold with no choices, 

no signals and lost services. We hope to work with the Committee to develop a DTV 

transition bill that will recognize the unique circumstances faced by providers and 

consumers in smaller markets and rural areas so that the DTV transition will take 

place in positive ways for all consumers, not just those located in populated areas. 

2. Current Retransmission Consent Rules Must Be Updated To Help Remedy the 

Imbalance of Power Caused By Media Consolidation 

The current retransmission consent and broadcast exclusivity laws and regulations limit consumer choice, and impede independent cable operators’ ability to compete in smaller markets and rural America by permitting distant media conglomerates to charge monopoly prices for programming. This situation must not be carried forward into the post-DTV world. 

Current laws and regulations allow broadcasters to combine retransmission consent and market exclusivity into a monopolistic hammer. Both of these rules were 

created to preserve local broadcasting, but now large media companies use those 

rules to hold localism hostage to increase profits, and gain wide distribution for 

niche programming like SoapNet and more recently LOGO, a gay-themed Viacom 

Network. These same practices that were used with analog broadcasting are already 

being applied to the digital world, accelerating the problem. 

Across America our association members and their customers are seeing early 

signs that broadcasters are using this leverage to lean excessively on independent 

cable operators to extract cash. ACA member’s systems usually serve only a small 

fraction of the households in any DMA and have no leverage in negotiations with 

broadcasters. Collectively our ACA members serve no more than 8 percent of all television households and most of rural America. We estimate that this year broadcasters will leverage retransmission consent rules to extract an additional $1 billion 

from consumers served by ACA members for the ‘‘privilege’’ to receive free over-theair signals. The average increase in basic cable rates as a result could well be $2– 

$5 per subscriber per month! Remember, for the consumer, they will not experience 

any improvement in service, nor receive any new programming despite being forced 

to pay this increase. 

And broadcasters don’t only demand cash for the right to carry their local television stations. Some members of the largest media conglomerates require our cable 

companies to carry affiliated satellite programming in local systems, and even in 

systems outside of the member’s local broadcast market. In this way, ownership of 

a broadcast license is used to force carriage of, and payment for, affiliated programming by consumers who do not even receive the broadcast signal at issue. These 

forced carriage requirements are also responsible for forcing on some of the most 

objectionable and indecent content on television today, such as SpikeTV, F/X, and 

Soap Net, among many others. 

Unless this Committee addresses these issues, price increases from broadcaster 

demands for cash and additional channels will continue unabated in the digital 

world. In fact, increased bandwidth will only add fuel to this fire. Large media companies are using the free spectrum licenses granted by the government for local 

broadcasting to pad margins and to leverage often questionable nationally delivered 

content. How those licenses are used is fundamentally part of Congress’s obligation 

in managing the transition of licenses from analog to digital. Congress created the 

retransmission consent laws in 1992, to protect localism and must change them in 

35 

2005, to protect consumers from the consequences of media consolidation in a new 

digital world. 

Broadcasters and programmers get away with these abuses today because the 

pricing of retransmission consent does not occur in a competitive market. Under the 

current regulatory scheme, media conglomerates and major affiliate groups are free 

to demand monopoly ‘‘prices’’ for retransmission consent, while blocking access to 

readily available lower cost substitutes. 

They do so by two methods: 

• First, the network non-duplication and syndicated exclusivity laws and regulations allow broadcasters to block cable operators from cable-casting network and 

syndicated programming carried by stations outside of the broadcaster’s protected zone. In other words, the conglomerate-owned station makes itself the 

only game in town, and can charge the cable operator a monopoly ‘‘price’’ for 

its must-have network programming. The cable operator needs this programming to compete. So your constituents end up paying monopoly prices. 

• Second, the media conglomerates require network affiliates to sign contracts 

that prevent the affiliate from selling their programming to a cable operator in 

a different market. Again, the conglomerate-owned and operated stations are 

the only game in town. 

In these situations, the cable companies’ only defense is to refuse to carry the programming. This has virtually no effect on the media conglomerates, but it prevents 

your constituents from receiving must-have network programming and local news. 

This result directly conflicts with the historic goals and intent of the retransmission 

consent and broadcast exclusivity rules, which were to promote consumer choice and 

localism. 

There are ready solutions to this dilemma. When a broadcaster seeks a ‘‘price’’ for 

retransmission consent, give independent, smaller and medium-sized cable companies the ability to shop for lower cost network programming for their customers. 

Accordingly, in our March 2, 2005, Petition for Rulemaking to the FCC, ACA proposed the following adjustments to the FCC’s retransmission consent and broadcast 

exclusivity regulations: 

• One: Maintain broadcast exclusivity for stations that elect must-carry or that 

do not seek additional consideration for retransmission consent. This ensures 

must-carry remains the primary option for programmers and ensures ‘‘localism.’’ 

• Two: Eliminate exclusivity when a broadcaster elects retransmission consent 

and seeks additional consideration for carriage. If the programmer decides to 

forego their must-carry rights in the hopes of putting together a business deal 

with an operator, allow the operator to negotiate freely without having their 

hands tied. 

• Three: Prohibit any party, including a network, from preventing a broadcast 

station from granting retransmission consent. 

On March 17, 2005, the FCC released ACA’s petition for comments. By opening 

ACA’s petition for public comment, the FCC has acknowledged that the current retransmission consent and broadcast exclusivity scheme requires further scrutiny. 

Before codifying a new regulatory regime for digital television that carries all of the 

baggage from the analog world with it, Congress should ask similar questions, and 

make the important decision to update current laws to rebalance the role of programmers and providers. 

Congress, too, should revisit the retransmission consent laws to correct the imbalance caused by the substantial media ownership concentration that has taken place 

since 1992. One solution is to codify the retransmission consent conditions imposed 

on Fox/News Corp./DIRECTV to apply across the retransmission consent process. 

The three key components of those conditions include: (i) a streamlined arbitration 

process; (ii) the ability to carry a signal pending dispute resolution; and (iii) special 

conditions for smaller cable companies. 

In summary, the retransmission consent and broadcast exclusivity regulations 

have been used by the networks and stations to raise rates and to force unwanted 

programming onto consumers. This must stop, but it won’t unless Congress acts. If 

a station wants to be carried, it can elect must-carry. If a station wants to charge 

for retransmission consent, let a true competitive marketplace establish the price. 

3. Correct Rules That Allow for Abusive Behavior Because of Media Consolidation 

and Control of Content 

What most consumers do not understand is that my independent company, and 

ACA member companies, must purchase most of their programming wholesale from 

36 

just four media conglomerates, referred to here as the ‘‘Big Four’’—Disney/ABC, 

Viacom/CBS, News Corp./DIRECTV/Fox, and General Electric/NBC. All of these 

companies have at their core one of the top four national broadcast networks. In 

dealing with the Big Four, all ACA members continually face contractual restrictions that eliminate local cable companies’ flexibility to package and distribute programming the way our customers would like it. Instead, programming cartels, 

headquartered thousands of miles away, decide what they think is ‘‘valuable’’ content and what our customers and local communities see. On a basic level the digital 

transition is a fundamental paradigm shift that could be very disruptive for consumers. Addressing these abuses is an opportunity for Congress to: (1) provide tangible benefits to consumers; (2) fulfill the true promise of the digital transition by 

providing more choice and control to consumers; and, (3) to make a consolidated 

media more accountable to people they serve. 

To fix this situation, Congress must update and reform the rules so that: 

a. Local providers of all forms and customers have more choice and flexibility 

in how programming channels are priced and packaged, including the ability to 

sell programming channels on a theme-based tier if necessary; 

b. Tying through retransmission consent must end. Today, the media giants hold 

local broadcast signals hostage with monopolistic cash-for-carriage demands or 

demands for carriage of affiliated media-giant programming, which was never 

the intention of Congress when granting this power; 

c. The programming pricing gap between the biggest and smallest providers is 

closed to ensure that customers and local providers in smaller markets are not 

subsidizing large companies and subscribers in urban America; and, 

d. The programming media giants must disclose, at least to Congress and the 

FCC, what they are charging local providers, ending the strict confidentiality 

and non-disclosure dictated by the media giants. Confidentiality and non-disclosure mean lack of accountability of the media giants. 

Let me explain. 

Forced Cost and Channels 

For nearly all of the 50 most distributed channels (see Exhibit 2), the Big Four 

contractually obligate my company, and all ACA members, to distribute the programming to all basic or expanded basic customers regardless of whether we think 

that makes sense for our community. These same contracts also mandate carriage 

of less desirable channels in exchange for the rights to distribute desirable programming. 

A small cable company that violated these carriage requirements would be subject 

to legal action by the media conglomerates, and for ACA’s members, this is a very 

real threat. 

These carriage restrictions prohibit ACA members from offering more customized 

channel offerings that may reflect the interests and values of our specific community. Thus, any interest we may have in offering a family tier as the basic tier to 

our constituencies is made virtually impossible because of the corporate decisions 

made by the Big 4 and the terms and conditions they impose on our companies. 

More Forced Cost and Channels Through Retransmission Consent 

As previously discussed, retransmission consent has morphed from its original intent to provide another means to impose additional cost and channel carriage obligations. As a result, nearly all customers have to purchase basic or expanded basic 

packages filled with channels owned by the Big Four (See Exhibit 3). 

Forced Carriage Eliminates Diverse Programming Channels 

The programming practices of certain Big Four members have also restricted the 

ability of some ACA members to launch and continue to carry independent, niche, 

minority, religious, and ethnic programming. The main problem: requirements to 

carry Big Four-affiliated programming on expanded basic eliminate ‘‘shelf space’’ 

where the cable provider could offer independent programming. 

If new independent programmers are to provide outlets for this type of programming to reach consumers, you must ensure that they are not subject to the handcuffs current programming practices place upon them. 

Local Flexibility Is Needed 

In order to give consumers more flexibility and better value, changes in current 

wholesale programming practices and market conditions are needed for all providers. Operators must be given more flexibility to tailor channel offerings that work 

best in their own local marketplaces. 

37 

As I have stated, the Big Four condition access to popular programming on a 

range of distribution obligations and additional carriage requirements. These restrictions and obligations eliminate flexibility to offer more customized channel 

packages in local markets. 

It’s important to point out that neither my company, nor any ACA member, controls the content that’s on today’s programming channels. That content—decent or 

not—is controlled by the media conglomerates that contractually and legally prevent 

us from changing or preempting any questionable or indecent content. 

However, if my company and other ACA members had more flexibility to package 

these channels with the involvement of our customers, current indecency concerns 

raised by both Congress and the FCC could also be addressed. 

Price Discrimination Against Smaller Cable Companies Makes Matters Worse 

The wholesale price differentials between what a smaller cable company pays in 

rural America, compared to larger providers in urban America, have little to do with 

differences in cost, and much to do with disparities in market power. These differences are not economically cost-justified and could easily be replicated in the IP 

world as smaller entrants are treated to the same treatment our members face. 

Price discrimination against independent, smaller and medium-sized cable companies and their customers is clearly anti-competitive conduct on the part of the Big 

Four—they offer a lower price to one competitor and force another other competitor 

to pay a 30–55 percent higher price for the same programming. In this way, smaller 

cable systems and their customers actually subsidize the programming costs of larger urban distributors and consumers. This sad reality should not carry-over with the 

digital transition. 

In order to give consumers in smaller markets and rural areas more choice and 

better value, media conglomerates must be required to eliminate non-cost-based 

price discrimination against independent, smaller and medium-sized cable operators 

and customers in rural America. 

With less wholesale price discrimination, ACA members could offer their customers better value and stop subsidizing programming costs of large distributors. 

Basis for Legislative and Regulatory Action 

Congress has the legal and Constitutional foundation to impose content neutral 

regulation on wholesale programming transactions. The program access laws provide the model and the vehicle, and those laws have withstood First Amendment 

scrutiny. This hearing provides the Committee with a key opportunity to help determine the important governmental interests that are being harmed by current programming practices. 

Furthermore, based in large part on the FCC’s actions in the DIRECTV-News 

Corp. merger, there is precedent for Congress and the FCC to address the legal and 

policy concerns raised by the current programming and retransmission consent practices of the media conglomerates. The FCC’s analysis and conclusions in the News 

Corp. Order persuasively establish the market power wielded by owners of ‘‘must 

have’’ satellite programming and broadcast channels, and how that market power 

can be used to harm consumers. That analysis applies with equal force to other 

media conglomerates besides News Corp. 

Pierce the Programming Veil of Secrecy—End Nondisclosure and Confidentiality 

Most programming contracts are subject to strict confidentiality and nondisclosure 

obligations, and my company, and ACA members are very concerned about legal retaliation by certain Big Four programmers for violating this confidentiality. Ask me 

what I have to pay to receive a given channel and I cannot tell you because of terms 

and conditions the conglomerates insist upon. Why does this confidentiality and 

nondisclosure exist? Who does it benefit? Consumers, Congress, the FCC? I don’t 

think so. Why is this information so secret when much of the infrastructure the 

media giants benefit from derives from licenses and frequencies granted by the government? 

Congress should obtain specific programming contracts and rate information directly from the programmers, either by agreement or under the Committee’s subpoena power. That information should then be compiled, at a minimum, to develop 

a Programming Pricing Index (PPI). The PPI would be a simple, yet effective way 

to gauge how programming rates rise or fall while still protecting the rates, terms, 

and conditions of the individual contract. By authorizing the FCC to collect this information in a manner that protects the unique details of individual agreements, 

I cannot see who could object. 

Armed with this information, Congress and the FCC would finally be able to 

gauge whether rising cable rates are due to rising programming prices as we have 

claimed, or whether cable operators have simply used that argument as a ruse. A 

38 

PPI would finally help everyone get to the bottom of the problems behind higher 

cable and satellite rates. We at ACA are so convinced that this type of information 

will aid you in your deliberations that we challenge our colleagues in the programming marketplace to work with us, and this committee, to craft a process for the 

collection of that data. 

In short, without disclosure, there is no accountability. The digital transition is 

about how to manage broadcasting in America, and is an opportunity to make 

things fundamentally better for consumers. 

4. Make Access To Quality Local-Into-Local Television Signals Available 

In the first section of my testimony, I outlined the enormous technical, financial, 

and operational challenges facing independent cable in smaller markets and rural 

areas to accomplish the DTV transition. While we are committed to making the 

transition work, it will be no small feat to make this transition happen in ACA 

members’ marketplaces without putting the many advanced services we now provide 

at great risk. 

Another important reality about digital signals is that they will not likely have 

the same distribution range as the analog signals they replace. One way to help 

solve this problem is to grant cable access to local-into-local television signals already being delivered by direct broadcast satellite (DBS) companies. 

The digital spectrum assigned will not have the same propagation qualities as 

many of the analog signals they replace. As a result, while most metropolitan cable 

operators and DBS will have access to improved digital signals, some rural cable 

operators will find they no longer can receive any usable signal at all. This is what 

is refered to as the digital cliff. In local-into-local markets, DBS can deliver clear, 

local broadcast signals regardless of distance from transmitters. ACA members and 

their buying representative, the National Cable Television Cooperative in Lenexa, 

Kansas, have asked both DIRECTV and EchoStar for the right to buy and pay for 

access to DBS’ local-into-local signals where a good quality signal is not available 

over-the-air. However, the DBS duopoly refuses to allow rural cable systems to receive these DBS-delivered broadcast signals, even though DBS now sells the same 

signals to private cable operators, satellite master antenna system owners, and several Bell companies. 

Ironically, DBS now refuses to grant access to its programming, despite the favored regulatory treatment it received to have access to cable programming. The 

ability to receive local broadcast signals was the reason Congress enacted the Satellite Home Viewer Improvement Act in 1999, which Congress recently reauthorized 

through SHVERA. But SHVERA does nothing to solve the local signal problem for 

rural cable operators and customers. 

Congress can solve this problem by revising the retransmission consent laws as 

follows: 

In markets where a satellite carrier delivers local-into-local signals, that satellite carrier shall make those signals available to MVPDs of all types on nondiscriminatory prices, terms and conditions where the MVPD has the consent 

of the broadcaster to retransmit the signal. 

ACA’s recommended revisions to the laws and regulations governing retransmission transmission consent and broadcast exclusivity are modest. But they will 

advance the widespread dissemination of good, quality local broadcast signals to 

your constituents, and will address the serious competitive imbalance currently 

hurting small market and rural cable systems. Carrying this restrictive situation 

into the DTV world would further compound this mistake. All video vendors must 

be able to have access to quality signals if they are going to be viable competitors 

within in the DTV marketplace. 

Conclusion 

This Committee stands today at the threshold of the new digital world, but it is 

also a precipice. The challenges are many and the risks are great. 

The DTV transition provides you with the power to determine whether to recognize that rural America and its service providers have unique financial and geographic challenges to face while making this conversion. At the same time you have 

the opportunity to repudiate outdated regulatory structures that raise rates and 

force programming on your constituents, while replacing it by injecting marketbased solutions. 

I hope you will be able to address both halves to this problem, and I appreciate 

the opportunity to testify on behalf of the ACA’s many members’ views on these 

matters. 

39 

EXHIBIT 1—EXPECTED COST OF THE DIGITAL TRANSITION

Upgrading headends to 

receive and transmit 

digital signals 

Upgrading headends to 

downconvert signals to 

analog 

Cost per headend $9,000 $4,500 

Cost per set-top box $400 

Cost per subscriber $5,000 

Per-Company Costs To Upgrade Facilities To Receive and Transmit Digital 

Signals 

Company #1 

Number of current non-digital subscribers: 360,000. 

Avg. 1 TV per household Avg. 2 TVs per household 

Total capital outlay for 2006–2008 $87,300,000 $135,540,000 

Percent of annual capital budget 49.32 percent 76.58 percent 

Company #2 

Total subscribers: 50,679. 

Cost per encrypted HD channel: $4,587–$6,407. 

Company #3 

Total subscribers: 35,000. 

Total capital outlay for 2006–2008: $85,000,000–$135,000,000. 

EXHIBIT 2—OWNERSHIP OF THE TOP 50 PROGRAMMING CHANNELS

Channel Ownership 

BET Viacom/CBS 

CMT Viacom/CBS 

MTV Viacom/CBS 

Nickelodeon Viacom/CBS 

Spike Viacom/CBS 

TV Land Viacom/CBS 

VH1 Viacom/CBS 

Comedy Central Viacom/CBS 

ABC Family Walt Disney Co./ABC 

Disney Walt Disney Co./ABC 

ESPN Walt Disney Co./ABC 

ESPN2 Walt Disney Co./ABC 

Lifetime Walt Disney Co./Hearst 

A&E Hearst/ABC/NBC 

History Hearst/ABC/NBC 

CNBC GE/NBC 

MSNBC GE/NBC 

Sci-fi GE/NBC 

USA GE/NBC 

Bravo GE/NBC 

Shop NBC GE/NBC 

Fox News News Corp. 

Fox Sports News Corp. 

FX News Corp. 

Speed News Corp. 

TV Guide News Corp. 

CNN Time Warner/Turner 

Headline News Time Warner/Turner 

TBS Time Warner/Turner 

TCM Time Warner/Turner 

TNT Time Warner/Turner 

TOON Time Warner/Turner 

Court TV Time Warner/Liberty Group 

Animal Planet Liberty Media 

Discovery Liberty Media 

40 

Channel Ownership 

Travel Liberty Media 

TLC Liberty Media 

Golf Comcast Corp. 

Outdoor Life Comcast Corp. 

E! Comcast Corp. 

QVC Comcast Corp. 

HGTV Scripps Company 

Food Scripps Company 

AMC Rainbow/Cablevision Systems 

C-Span National Cable Satellite Corp. 

C-Span II National Cable Satellite Corp. 

WGN Tribune Company 

Hallmark Crown Media Holdings 

Weather Landmark Communications 

HSN IAC/InterActiveCorp. 

EXHIBIT 3—CHANNELS CARRIED THROUGH RETRANSMISSION CONSENT

Program Service Ownership 

FX News Corp. 

Fox News News Corp. 

Speed News Corp. 

National Geographic News Corp. 

Fox Movie Network News Corp. 

Fox Sports World News Corp. 

Fuel News Corp. 

ESPN2 Walt Disney Co./ABC 

ESPN Classic Walt Disney Co./ABC 

ESPNews Walt Disney Co./ABC 

Disney from premium to basic Walt Disney Co./ABC 

Toon Disney Walt Disney Co./ABC 

SoapNet Walt Disney Co./ABC 

Lifetime Movie Network Walt Disney Co./Hearst 

Lifetime Real Women Walt Disney Co./Hearst 

MSNBC GE/NBC 

CNBC GE/NBC 

Shop NBC GE/NBC 

Olympic Surcharges for MSNBC/CNBC GE/NBC 

Comedy Central Viacom/CBS 

MTV Espanol Viacom/CBS 

MTV Hits Viacom/CBS 

MTV2 Viacom/CBS 

Nick GAS Viacom/CBS 

Nicktoons Viacom/CBS 

Noggin Viacom/CBS 

VH1 Classic Viacom/CBS 

VH1 Country Viacom/CBS 

LOGO Viacom/CBS 

Comparing this with the Top Fifty Channels in Exhibit 1 demonstrates how certain members of the Big 

Four have used retransmission consent to gain a significant portion of analog and digital channel capacity. 

The CHAIRMAN. Well, thank you very much. 

Our next witness is Richard Slenker, the Executive Vice President of DIRECTV. 

STATEMENT OF RICHARD SLENKER, EXECUTIVE VICE 

PRESIDENT, TECHNOLOGY AND ENGINEERING 

OPERATIONS, DIRECTV, INC. 

Mr. SLENKER. Chairman Stevens, Senator Inouye, and members 

of the Committee, my name is Richard Slenker, and I’m the Executive Vice President of Technology and Engineering Operations at 

41 

DIRECTV. Thank you for inviting me to testify on behalf of 

DIRECTV regarding the digital television transition. 

I have two simple messages today. First, DIRECTV is spending 

billions of dollars on satellites that will allow us to offer as many 

as 1,500 local channels in high definition by 2008, all without a 

government mandate of any kind. Second, DIRECTV’s ability to 

offer these local high-definition channels will be seriously compromised, if not totally eliminated, if Congress adopts onerous carriage requirements. 

While the requirements would burden cable operators, they 

would cripple DIRECTV’s high-definition local plans. In 1999, Congress granted satellite operators the right to carry local broadcast 

stations. In doing so, Congress created a ‘‘carry one/carry all’’ regime for satellite that reflected the technological differences between satellite and cable. This unleashed, for the first time, real 

competition to cable, and the result has been nothing short of astounding. 

In 1999, the DBS industry had ten million customers. Today, satellite has more than 25 million customers. This extraordinary success is due, in no small measure, to the fact that Congress recognized the differences between satellite and cable technology, and 

crafted a law that takes these differences into account. As a result, 

DIRECTV has invested billions of dollars to provide analog local 

broadcast stations in 135 local markets serving over 93 percent of 

U.S. television households. 

We are now extending this commitment to the provision of highdefinition local broadcast channels, once again investing billions of 

dollars to design and launch four next-generation satellites. This 

investment will drive vigorous competition with cable, and hasten 

the digital transition, all to the benefit of the American public. 

Our ability to bring this digital and high-definition broadcast 

programming to U.S. consumers will collapse if satellite operators 

are forced to carry broadcasters’ multicast channels or all free bits. 

Any material increase in existing carriage obligations will cripple 

our high-definition plans and undermine the ability of DBS to compete effectively with cable. 

To appreciate why any additional carriage requirements on DBS 

would have such a devastating effect, it’s important to understand 

the capacity limitations and technical differences between satellite 

and cable. 

Quite simply, satellite has far less capacity to carry local signals 

than do cable operators. This reflects the differences between offering local signals on a national satellite platform versus a local 

cable system. While a typical cable system may only retransmit 10 

to 15 broadcast signals at a time, DIRECTV must simultaneously 

retransmit over 1,000 broadcast signals from a single satellite constellation. 

DIRECTV has met this challenge by employing state-of-the-art 

technology. First, DIRECTV has launched spot-beam satellites that 

create additional capacity by reusing spectrum in different geographic areas. Second, we increase capacity by using advanced 

compression, a technique for mathematically removing redundant 

and unneeded digital bits. 

42 

DIRECTV believes its future lies in bringing its customers more 

high-definition programming, particularly local stations in high 

definition. Our plans depend critically on two factors: first, the ability to use cutting-edge technology, especially use of advanced compression techniques; and second, the carriage of a broadcaster’s primary signal only. Both of these elements are crucial, because even 

compression has its limits. The amount of underlying broadcast 

content to be carried must be reasonable. 

If DIRECTV must carry each broadcaster’s multicast programming, we will be forced to cut back dramatically on the number of 

markets we currently serve. Thus, it is imperative that the satellite 

carriers be allowed to transmit only the compressed primary video 

signal if they are to continue providing local-into-local service in a 

substantial number of the Nation’s markets. 

DIRECTV is able to retransmit local broadcast signals in the 

first place because the ‘‘carry one/carry all’’ rules specify only that 

DIRECTV retransmit the primary video and accompanying audio 

signals of local broadcast stations, and specifically permits 

DIRECTV to use reasonable compression techniques in such retransmissions. DIRECTV can, thus, meet its statutory obligations, 

all the while maintaining the digital clarity that has become the 

hallmark of our service. 

Imposing a multicast, must-carry, or all-free-bits obligation on 

DBS would force DIRECTV to scrap its local-into-local high-definition plans and shrink its local-into-local broadcast service, casting 

an ominous shadow over what has been an extremely successful 

Congressional effort to promote competition in the video marketplace. We encourage Congress to maintain policies that preserve a 

vibrant, competitive video marketplace that has reaped enormous 

benefits for the American public. 

Mr. Chairman, and members of the Committee, I’d like to thank 

you for allowing me to give DIRECTV’s perspective on these issues, 

and I’m happy to take your questions. 

[The prepared statement of Mr. Slenker follows:] 

PREPARED STATEMENT OF RICHARD SLENKER, EXECUTIVE VICE PRESIDENT, 

TECHNOLOGY AND ENGINEERING OPERATIONS, DIRECTV, INC. 

Chairman Stevens, Senator Inouye, and members of the Committee, my name is 

Richard Slenker and I am the Executive Vice President, Technology and Engineering Operations at DIRECTV Inc. (DIRECTV). I am responsible for the day-to-day 

operations of DIRECTV’s satellites, broadcast centers, and other technologies used 

to provide direct broadcast satellite (DBS) service. Thank you for inviting me to testify on behalf of DIRECTV regarding the digital television (DTV) transition. 

I have two simple messages for you today. First, DIRECTV is spending billions 

of dollars on satellites that will allow us to offer as many as 1,500 local channels 

in high-definition (HD) by 2008—all without a government mandate of any kind. 

Second, DIRECTV’s ability to offer these local HD channels will be seriously compromised, if not totally eliminated, if Congress adopts onerous carriage requirements. While such requirements would burden cable operators, they would cripple 

DIRECTV’s HD local plans. 

In 1999, Congress granted satellite operators the right to carry local broadcast 

stations. In doing so, Congress created a ‘‘carry one carry all’’ carriage regime for 

satellite that reflected the technological differences between satellite and cable. This 

unleashed, for the first time, real competition to cable, and the result has been nothing short of astounding. In 1999 the DBS industry had 10 million customers—and 

today satellite has more than 26 million customers. This extraordinary success is 

due in no small measure to the fact that Congress recognized the differences between satellite and cable technology, and crafted a law that takes these differences 

43 

1 A single DBS transponder covers 24 MHz of spectrum. 

into account. As a result, DIRECTV has invested billions of dollars to provide analog local broadcast stations in over 135 local markets, serving over 93 percent of 

U.S. television households. 

We are now extending this commitment to the provision of high definition local 

broadcast channels. We are investing billions more to design and launch four nextgeneration satellites over the next several years. These satellites, which markedly 

extend the state-of-the-art in the satellite industry, will have the capacity for as 

many as 1,500 high definition local broadcast channels. This investment will drive 

vigorous competition with cable and hasten the digital transition, all to the benefit 

of the American public. 

I must caution members of the Committee that our ability to bring this digital 

and high definition broadcast programming to U.S. consumers will collapse if satellite operators are forced to carry broadcasters’ multicast service or ‘‘all free bits.’’ 

Any material increase in existing carriage obligations will cripple our high definition 

plans and undermine the ability of DBS to compete effectively with cable. 

DIRECTV urges Congress not to let this happen. Congress should build on the 

success of ‘‘carry one/carry all’’ such that the ‘‘the practical differences between the 

two industries are recognized and accounted for’’ in the digital world. In this way, 

Congress will ensure that the vibrant competitive marketplace we experience today 

will continue to exist tomorrow. 

DIRECTV Relies on State-of-the-Art Technology To Retransmit Local 

Stations 

Given its dominance in the video market, it is understandable that the focus of 

the policy debate has centered on cable television. But it is critically important for 

policymakers to account for the capacity limitations and technical differences between DBS and cable in any DTV legislation. Otherwise, expanded digital carriage 

requirements will threaten DIRECTV’s HD rollout in markets across the country, 

which would only serve to harm competition in the video marketplace. 

First, satellite has far less effective capacity to carry local signals than do cable 

operators. This reflects the difference between offering local signals on a national 

satellite platform vs. a local cable system. 

A typical cable central office, or ‘‘headend,’’ collects over-the-air broadcast signals 

from the surrounding community and retransmits those signals to viewers. Thus, 

a cable system will typically retransmit ten to fifteen broadcast signals at a time. 

DIRECTV, by contrast, must retransmit broadcast signals in markets from coast to 

coast from a single satellite constellation, the satellite equivalent of the cable 

headend. DIRECTV today retransmits the signals of over 1,000 local stations simultaneously. This requires an enormous amount of capacity and has been the principal 

engineering challenge DIRECTV has faced over the past 5 years. 

DIRECTV has met this challenge by employing state-of-the-art technology. First, 

DIRECTV has launched spot-beam satellites that create additional capacity by 

reusing spectrum in different geographic areas. The more traditional CONUS-beam 

satellites have a single, multi-frequency (or multi-transponder) 1 footprint that covers the entire continental United States. While CONUS satellites are excellent for 

retransmitting national programming, using them to retransmit local broadcast programming is a very wasteful use of spectrum. For example, if DIRECTV wanted to 

retransmit a Boston station on a CONUS satellite, it would have to retransmit the 

station to the entire United States, even though, by law, only Boston-area subscribers could watch it. Naturally, if one were to try to retransmit local broadcast 

stations in every market throughout the country via CONUS satellites, capacity on 

the satellites would quickly be exhausted leaving little, if any room for national 

cable programming. 

By contrast, spot-beam satellites are much better for the retransmission of local 

broadcast signals because, rather than ‘‘seeing’’ the entire United States with a 

large number of transponders, they ‘‘see’’ multiple, discrete areas, each with only 

one or two transponders. Spot beam satellites thus allow the geographic ‘‘reuse’’ of 

satellite frequencies—as transponders operating over the same frequencies can simultaneously transmit signals to Houston and Chicago. This reuse is akin to your 

car radio—there might be FM stations operating at 99.5 in Washington, D.C., New 

York, and Boston, and, as long as they are far enough apart, they do not interfere 

with one another. Thus, the 99.5 frequency is ‘‘re-used’’ among these three cities. 

44 

2To give you an idea of how important this technology is, DIRECTV has 46 DBS frequencies, 

10 of which have been dedicated for use in spot beams to deliver nearly 900 local broadcast stations. If these same frequencies were used in CONUS beams, they could carry only on the order 

of 120 stations. Clearly, DIRECTV’s use of advanced spot beam technology has been the 

lynchpin of its local service capability. 

By covering discrete and non-overlapping geographic areas, satellite spot-beams can 

accomplish much the same thing.2

The second technique used to increase capacity is compression, a technique for 

mathematically manipulating information to remove redundant and unneeded bits. 

In the early 1990s, compression rates were roughly 5:1 (meaning that you could fit 

five cable channels or broadcast signals on a standard 24 MHz DBS transponder). 

Today, for standard definition television signals, compression rates are typically between 11:1 to 12:1, and further improvements are on the horizon. Compression rates 

for HD signals are, of course, much lower—but these, too, are expected to improve. 

Take, for example, the Washington D.C. designated market area. DIRECTV satellites have a spot beam with two transponders covering the region around Washington, D.C. At 12:1 compression, the retransmission of each of Washington’s 12 

analog broadcast stations in standard definition format can be achieved while leaving additional capacity for carriage of local signals in the other markets covered by 

the same spot beam. However, if DIRECTV were required to carry each station’s 

multicast signal without using compression, it would have to allocate up to an entire 

transponder to each station. Under this scenario, DIRECTV could carry only two 

Washington stations, and thus, under the current ‘‘carry one carry all’’ rules, 

DIRECTV could not retransmit any local signals to Washington (much less have capacity remaining to support local service in other markets within the beam). Accordingly, the spot beam infrastructure that DIRECTV has developed, and deployed at 

a cost of billions of dollars, would be rendered essentially useless. Moreover, even 

if it were possible to take all of the frequencies DIRECTV currently uses for local 

signal carriage nationwide and dedicate them to providing local stations in Washington at a 1:1 compression ratio, there still would not be sufficient capacity to serve 

even this single market. 

The bottom line is that, if you want to know how much capacity a satellite operator has to retransmit local broadcast signals in a particular market, you need to 

know not just how many transponders the satellite operator has, but also how many 

transponders are available in the spot beam covering that market, as well as how 

much the satellite operator is able to compress the signal while still maintaining signal quality. 

When the Transition Ends, Cable Will Set Aside Less Bandwidth for Broadcast Signals While DBS Will Dedicate More 

The cable industry does not face the same technological hurdles or bandwidth constraints as DBS when it comes to delivering local broadcast stations. And more importantly, the end of analog broadcasting will result in a huge spectrum windfall 

for the cable industry. Today, cable provides local broadcast signals in an analog format. Assuming the absence of additional carriage obligations, by switching to digital 

and employing compression techniques, cable operators will be able to reduce the 

amount of bandwidth they set aside for broadcasters by at least 100 percent, and 

in many cases, much more. The same is not true for DBS. We have always been 

digital, and have already realized the efficiencies and bandwidth savings made possible by advanced modulation, coding, and most importantly, digital compression. As 

these techniques have improved, DIRECTV has been able to ‘‘fit’’ more analog 

broadcast channels into spot beams. HD programming, however, contains far more 

data than analog, requiring far more capacity even after compression. Thus, HD 

broadcasting will require significantly more bandwidth than DIRECTV dedicates to 

broadcasters today. And, any kind of multicasting or ‘‘free bit’’ requirement would 

only further exacerbate this discrepancy imposing a far greater burden on DBS than 

on cable. 

Multicast Proposals Would Cripple DIRECTV’s Local-Into-Local HD Service 

DIRECTV is able to retransmit local broadcast signals in the first place because 

the ‘‘carry one carry all’’ rules specify only that DIRECTV retransmit the ‘‘primary 

video [and] accompanying audio’’ signals of local broadcast stations. They rightfully 

do not mandate the amount of bandwidth that DIRECTV must use to retransmit 

the signals, or that DIRECTV must retransmit signals that do not relate to the primary video feed. Indeed, the law specifically permits DIRECTV to use ‘‘reasonable 

compression techniques’’ in such retransmissions. DIRECTV can thus meet its statVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00048 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
45 

3See, e.g., Letter from Henry L. Baumann, NAB, et al., to Chairman Michael Powell, FCC, 

MB Docket No. 98–120 (Sept. 5, 2002) (suggesting that cable operators not be permitted to ‘‘alter 

the bits within the ‘data packets’ of the broadcast DTV stream’’ ). 

utory obligations, while reducing the bandwidth of the signals, all the while maintaining the digital clarity that is a hallmark of our service. 

Some broadcasters, however, want to change this formulation for the retransmission of DTV signals. They say that satellite carriers should be required to retransmit not just the ‘‘primary video’’ of digital signals, but also multicast services 

or in the alternative ‘‘all free bits.’’ What that really means is that satellite carriers 

would be required to retransmit the entire bit stream of a broadcaster’s digital 

transmission—including redundant and other bits unnecessary for a quality digital 

video signal, and even bits that have nothing to do with video service at all.3 Were 

such a rule applied under today’s carry one carry all regime, this would mean that 

satellite operators would have to offer such a ‘‘pipe’’ to all broadcasters in a market 

before retransmitting the digital signals of any such broadcaster. As my earlier discussion of the Washington, D.C. market illustrates, if that were the rule, DIRECTV 

would be carrying local stations in a handful of markets versus the 135 we are in 

today. 

DIRECTV believes its future lies in bringing its customers more high-definition 

signals, particularly local stations in high definition. Moreover, those signals will 

have to be of sufficient quality to compete with the high-definition offerings of cable 

operators, or DIRECTV will likely lose subscribers to cable. Our plans depend critically upon two factors: (1) the ability to use cutting-edge technology, especially the 

use of advanced compression techniques, and (2) the carriage of a broadcaster’s primary video signal only. If DIRECTV is required to carry each broadcaster’s 

multicast programming, we will be forced to cut back dramatically on the number 

of digital markets we can serve. 

Multicast Must Carry Penalizes Creative Entrepreneurs and Threatens 

MVPD Competition 

Our decision to invest billions of dollars in order to provide a local-into-local HD 

broadcast service is a response to the demands of our customers and the competitive 

environment in which we operate. It would truly be unfortunate if Congress were 

to jeopardize this competition, and our ability to meet consumer demand, by imposing a multicast must-carry obligation on DBS. 

Quite frankly, the broadcasters have not made a compelling case as to why their 

existing must-carry rights—carriage of their primary video and accompanying audio 

signal—should be dramatically increased in a digital world. Broadcasters play an 

important role in their local communities and are required to serve the public interest in exchange for their use of the public airwaves. They play a special and unique 

role in our society and enjoy a special and unique privilege in the guaranteed carriage of their programming on cable and satellite systems. That privilege will remain undiminished once the transition to digital broadcasting is complete. But if the 

broadcasters want to exploit the opportunities that the digital era offers by creating 

new content and new services, there is simply no reason why they shouldn’t have 

to compete with every other entrepreneur with a good idea. Mandating the carriage 

of any new service a digital broadcaster may offer is unfair to every other nonbroadcast programmer, and will force MVPD platforms to use precious bandwidth 

based on government fiat rather than consumer demand. 

The MVPD marketplace is competitive and will respond to compelling ideas. If 

broadcasters create new programming services that consumers demand, competing 

distribution platforms will want to carry it (to the extent they have capacity to do 

so). Conversely, imposing a multicast must-carry obligation on DBS would force 

DIRECTV to scrap its local into local HD plans and shrink its local into local broadcast service, casting an ominous shadow over what has been a successful Congressional effort to promote multichannel video competition. 

We encourage Congress to maintain policies that preserve a vibrant competitive 

video marketplace that has reaped enormous benefits for the American public. 

Mr. Chairman and members of the Committee, I would like to thank you for allowing me to give DIRECTV’s perspective on these issues. I am happy to take your 

questions. 

The CHAIRMAN. Thank you very much. 

The last witness is Mr. John Lawson, President and CEO of the 

Association of Public Television Stations. 

Mr. Lawson? 

46 

STATEMENT OF HON. JOHN LAWSON, PRESIDENT/CEO, 

ASSOCIATION OF PUBLIC TELEVISION STATIONS (APTS) 

Mr. LAWSON. Mr. Chairman, Mr. Co-Chairman, it’s good to see 

you again. I’m still exhausted after the CPB hearing yesterday, and 

I’m not sure how you do this every day. Members of the Committee, thank you for inviting me to testify on behalf of the local 

public television stations. 

Public television has been a leader in the digital transition. We’ve raised, with your help, over $1.1 billion for the digital buildout. We’ve launched exciting new services in high definition, multicasting, and wireless data delivery. 

Last January, we concluded a landmark agreement that guarantees that multiple digital channels from every public television station will be carried on every major cable system in America. And 

my Association and the Department of Homeland Security have a 

cooperative agreement to use digital public television to upgrade 

the aging Emergency Alert System. 

We’re truly serious about completing the transition. We’re prepared to work with you to provide solutions to make a hard date 

a reality. The single-greatest barrier to success is the public’s lack 

of understanding about the conversion to DTV and what it really 

means for them. There needs to be a well-planned, adequately 

funded, closely coordinated campaign to reach, especially, the tens 

of millions of households who depend upon over-the-air reception. 

We need to make it seamless for them to go digital. This campaign 

should begin soon, and continue until every household is converted. 

Without this focus, Congress and we will have a consumer train 

wreck on our hands, and the hard date could be postponed for 

years. 

Public television would prefer to be part of a large coalition of 

stakeholders informed by the SwitchCo model in the U.K. But, 

whatever the model, public television is willing to play a leading 

role in this campaign. And we’re suited to do this for a number of 

reasons: 

First, the over-the-air-reliant TV viewers are our viewers. Research indicates that the over-the-air households correlate strongly 

with public television’s viewer base. When they watch television, 

these people tend to watch PBS. Other OTA viewers are disproportionately low-income, rural, Spanish-speaking, and elderly, and we 

also effectively reach them with our programming. 

Based on examples from Europe, consumers will actually buy settop boxes if they see a value in doing so, which usually means they 

get more free channels through DTV. Public television, here, provides that value, because we offer multicast programming, new free 

channels that are only available through digital reception. 

Finally, Americans trust public television, as confirmed in poll 

after poll. And we have a Universal Service mandate. We believe 

public television is in a unique position to reach the last holdouts, 

and help them go digital. 

Is there a cost to supporting consumer education? Yes. But combined with appealing new digital broadcast services, it could mean 

the government pockets a greater share of auction revenue. The 

set-top-box subsidy could be reduced, because consumers will actually seek the converter box in the marketplace. 

47 

Senators, you have assisted public television immensely in converting to DTV. Now is the chance to leverage that investment, to 

make us partners in completing the digital transition. 

We also believe other elements are needed for success: 

First, our agreement with NCTA guarantees carriage of our 

multicast programming on cable systems. We’re also talking with 

ACA. But there are no provisions in law, and no voluntary agreements in place yet, with the direct broadcast satellite operators; 

and, one way or the other, we must guarantee digital carriage on 

DBS. 

Second, we need guaranteed carriage on new technology platforms, and we are having promising discussions with the telco’s, 

I’m happy to report. 

Third, along with libraries, museums, and universities, we urge 

passage of S. 1023, the Digital Opportunity Investment Trust, or 

DOIT, which was introduced this year by Senators Dodd, Snowe, 

Durbin, and Burns. DOIT proposes to use a portion of spectrum 

auction revenue to capitalize a trust fund which would support the 

creation of digital content to serve the education needs of this country. DOIT is a historical descendant of the Land Grant College Act 

and the GI bill, both of which led to monumental expansions in 

educational access for Americans. 

Finally, we hope the Senate will continue its historic bipartisan 

role in support of public broadcasting. The Labor-HHS appropriations bill is being marked up today, and we urge you to provide full 

funding for public television and radio. And we greatly appreciate 

the positive comments yesterday. Investing in public television is 

a great investment for the digital transition. 

Thank you. 

[The prepared statement of Mr. Lawson follows:] 

PREPARED STATEMENT OF HON. JOHN LAWSON, PRESIDENT/CEO, 

ASSOCIATION OF PUBLIC TELEVISION STATIONS (APTS) 

Mr. Chairman, Senator Inouye, other members of the Committee, thank you for 

inviting me to testify on behalf of the local public television stations. 

Public television has been a leader in the digital transition. 

• We’ve raised, with Congress’ help, over $1.1 billion for the digital build-out. 

• We’ve launched exciting new services in HDTV, multicasting, and wireless data 

delivery. 

• Last January, we concluded a landmark agreement that guarantees that multiple digital channels from every public television station will be carried on 

every major cable system in America. 

• And my Association and the Department of Homeland Security have a cooperative agreement to use digital public television to upgrade the aging Emergency 

Alert System. 

We are truly serious about completing our march to what we call digital-only 

broadcasting. For these reasons, we are prepared to do what we can to make a 

‘‘hard date’’ a reality. We want to work with you to provide solutions for a successful 

transition. 

The single most significant barrier is the American public’s lack of understanding 

about the conversion to digital television and what it means to them. There needs 

to be a well-planned, adequately funded, closely coordinated effort to educate and 

inform the general public. We must reach the tens of millions households who depend upon over-the-air reception and make it seamless for them to go digital. Without this focus, we, and Congress, will have a consumer train wreck on our hands, 

and the hard date could be postponed by years. 

48 

We need a consumer awareness campaign that begins soon and continues until 

every household has been converted. And like any campaign, it should use a variety 

of media and outreach tactics—especially television spots. 

Public television would prefer to be part of a large coalition of stakeholders, informed by the SwitchCo model in the United Kingdom. But whatever the model, 

PTV is willing to play a leading role in this campaign. 

We are in a unique position to play a central role for a number of reasons. 

• The over-the-air reliant TV viewers are our viewers. Research indicates that the 

OTA households correlate strongly with public television’s viewer base. When 

they watch television, these people tend to watch PBS, even more than people 

with cable or satellite. 

• Other OTA viewers are disproportionately low-income, rural, Spanish-speaking, 

and elderly viewers, all of whom we reach with our programming, in some cases 

more than any other medium. 

• Based on examples from Europe, consumers will actually buy set-top boxes if 

they see a value in doing so, which usually means they get more free channels 

through DTV. Public television here provides that value, because we offer 

multicast programming—new free channels that are only available through digital reception. We are the leaders, by far, in the broadcasting industry, in offering new digital channels. 

• Finally, there is the trust factor. Americans trust public television, as confirmed 

in poll after poll. We also have a Universal Service mandate. We believe public 

television is in a unique position to reach the last hold-outs and help them go 

digital. 

Is there a cost to supporting consumer education? Yes, but I also believe the more 

we invest in consumer education, the less the government will have to use auction 

revenue to subsidize set-top boxes. Ultimately, consumer education, combined with 

appealing new digital broadcast services, could mean the government pockets a 

greater share of auction revenue, because consumers will seek the converter boxes 

in the marketplace. (Please refer to Appendix A for a more detailed description of 

a proposed consumer education campaign involving the public television system.) 

Senators, you have assisted public television immensely in converting to DTV. 

Now is a chance to leverage that investment, to make us partners in our Nation’s 

drive to complete the digital transition. 

Beyond consumer education and technical assistance, we believe there are other 

elements necessary for a successful transition. 

• First, our agreement with the National Cable & Telecommunications Association and its members, guarantees carriage of public television’s multicast programming on cable systems. But there are no provisions in law, and there are 

no voluntary agreements to ensure carriage of broadcasters’ digital signals on 

direct broadcast satellite systems. One way or another, we must guarantee carriage of our digital signals on DBS. 

• Second, we need guaranteed carriage on new technology platforms. We are having promising discussions with the telcos, who tell us that they want public television’s digital content. But again, one way or the other, we need to ensure public television is carried and every American has access. 

• Third, the Department of Homeland Security has extended its agreement with 

our Association under which we have conducted a pilot project to develop the 

Digital Emergency Alert System for the National Capital Region. We are now 

entrusted with planning the national rollout of the D–EAS using digital public 

television stations and the PBS satellite interconnection system as the backbone. DHS is creating a system—through the dual use of our infrastructure— 

that enables the President to communicate instantly, through many different 

communications devices, to the greatest number of Americans in a national crisis. We are requesting an authorization to fund additional connections to this 

backbone so that state and local authorities can also originate emergency alerts 

for distribution over the system. 

• Fourth, APTS urges the passage of S. 1023, the Digital Opportunity Investment 

Trust (DOIT), which was introduced this year with Senators Dodd, Snowe, Durbin, and Burns as co-sponsors. DOIT proposes to use a portion of spectrum auction revenue to capitalize a trust fund, which would support the creation of digital content to serve the education needs of this country. This proposal is the 

historical descendant of the Land Grant College Act and the GI Bill, both of 

which led to monumental expansions in educational access for Americans. 

49 

• Finally, we hope the Senate will continue its historic, bipartisan role in support 

of public broadcasting. The Labor-HHS-Education appropriations bill is being 

marked up today, and we urge you to provide full funding for public television 

and radio. It is a great investment in the digital transition. 

Thank you. 

APPENDIX A—HOW TO MAKE THE ‘‘HARD DATE’’ LESS HARD ON VIEWERS: A 

PROPOSED CONSUMER EDUCATION INITIATIVE BY PUBLIC TELEVISION STATIONS

Public Television has embraced the digital transition for one simple reason: we 

recognized early the rich dividends in expanded services—from HD to multicasting 

to data-casting—that digital technology would make possible for our stations to deliver. For Public Television, the transition is succeeding on the provider side, but 

we fear the consequences for households relying on over-the-air (OTA) service if we 

fail to prepare them for the final chapter of the transition. 

The Problem: Shutting Off Analog Means Potentially Stranding Viewers 

Whether viewed from a political, economic, or public service perspective, stranding 

large numbers of viewers when analog signals are turned off is an outcome all 

stakeholders in the digital transition want to avoid. It is estimated that up to 22 

million households rely exclusively on analog service—and that those households 

are disproportionately lower-income, rural, and/or elderly. 

The Solution: Public Television Stations Lead a Public Education Effort 

The key to a successful transition for OTA households is reaching the affected 

households with good information. With nearly 90 million viewers tuning in each 

week, and nearly 70 percent of households tuning in at least once a month, Public 

Television has the capacity to reach nearly every American affected by the analog 

shut-off. 

We propose a public education effort that might include, but is not limited to: 

• The creation of on-air spots to alert viewers to the impending analog shut-off, 

explain why the conversion is taking place, and inform them of the steps they 

can take to receive a digital signal by the shut-off date; 

• The creation of local non-broadcast outreach efforts aimed at educating targeted 

audiences about the transition, and the means to ensure continuation of service 

in a digital format; 

• Convening local partnerships, including retailers, other broadcasters, consumer 

electronics manufacturers, and social service organizations to reach affected 

consumers throughout each community; 

• Serving as a local dissemination point of contact for set-top boxes (STBs) to eligible households as defined by Congress; and 

• Provide technical assistance for consumers to help ensure they can install the 

needed technology and receive over-the-air digital signals. 

Why Public Television? 

Public Television reaches 99 percent of the American public. Moreover, a recent 

study commissioned by the Corporation for Public Broadcasting found that households dependent on over-the-air reception are more likely than others to be regular 

public television viewers. 

More importantly, we know we can effectively educate Americans about the value 

of digital broadcast technology because we’ve already done it. Long before there 

were any transmitters up and operating: 

• In 1998–99, PBS and the Harris Corporation created the DTV Express, a 66- 

foot truck carrying a fully integrated digital television station and HD theater. 

The DTV Express traveled the country, providing seminars for state legislators, 

educators, funders, engineers, and consumers. 

• PBS created HD spots for major retailers—including Best Buy, Circuit City, 

Sears, and Costco—who used them to promote HD and sell HDTV sets. 

• Local stations have engaged in extensive outreach and education to consumers 

and potential content providers—from the local Rotary club to the annual meeting of the National Association of State Universities and Land Grant Colleges. 

• PBS.org features a special DTV section including a layman’s ‘‘crash course’’ on 

DTV, local station guides, technical information, and related links. Local station 

websites are providing similar information. 

50 

Thanks in part to these efforts, Public Television has raised approximately $1.1 billion, including $479 million from state governments, to fund the digital build-out. 

We are grateful to have the Federal Government as a major partner in this regard; 

beginning in Fiscal Year 2001, Congress has appropriated about one-third of the 

funding raised to date. 

Americans Trust Their Local Public Television Stations 

Polling consistently confirms the high degree of value and trust that Americans 

place in public broadcasting. At a time when we are asking Americans to ‘‘surrender’’ a technology to which they have grown accustomed, and embrace a new 

technology, it makes sense to place a trusted, local institution at the center of a 

comprehensive public education initiative. We see this as a natural extension of our 

public service mission. 

APPENDIX B 

LOOKING OUT FOR NUMBER TWO

By Mark Schubin (May 2005) 

The Balanced Budget Act of 1997, says U.S. analog TV may not be broadcast after 

December 31, 2006. So why does House Commerce Committee head Joe Barton 

want new legislation with a ‘‘hard date’’? It’s because the 1997 Act has three exceptions. 

The first is rarely mentioned. It states that, if an ABC, CBS, Fox, or NBC outlet 

is legitimately not yet broadcasting digitally by the end of 2006, no station in its 

market need shut down its analog TV broadcasts. No one expects that. 

The third is often mentioned. It’s referred to as the ‘‘85 percent rule,’’ though that 

percentage doesn’t appear in the Act. It allows analog broadcasts to continue in any 

market where 15 percent of households or more do not have digital TV reception 

equipment and also don’t subscribe to a cable, satellite, or other service providing 

signals from each digital station in that market. 

There are questions about whether cable systems carry each TV broadcaster in 

all markets. Fifteen markets have more than 19 stations each, and in each there 

are stations more than 55 miles from the center. But the FCC could come up with 

a definition of ‘‘market’’ that eliminates those problems, and the proportion of U.S. 

households that subscribe to a multichannel service are already around 85 percent 

and growing. 

That leaves exception number two. Analog TV may continue in any market where 

‘‘digital-to-analog converter technology is not generally available.’’ 

The FCC’s ‘‘tuner mandate’’ has dramatically increased the number of digital-TV 

receivers. It kicked in last July only for 50 percent of TVs larger than 35-inches, 

and by year end, it had already caused a 150 percent increase in digital-TV reception devices. But that’s receivers, not converters. 

In February 2004, KCSM, a public-TV station in San Mateo, CA, found out that 

its lease on its analog transmission tower would not be renewed. The station had 

been broadcasting digitally since September 2003, and was in a market that had 

greater-than 80 percent cable penetration and 9 percent local-into-local satellite carriage. So they decided—pending FCC approval—to drop their analog transmissions. 

They did everything right. They contacted all of the cable and satellite systems 

serving their market to ensure continued carriage via their digital broadcasts. They 

contacted local retailers. They informed viewers of the impending change on the air 

and via their website. They compiled lists of receivers. They provided reception instructions. They trained staff to field inquiries from viewers. Then, in late May 

2004, they pulled the plug. 

Viewers whose screens went dark overwhelmed the station with calls. About 10 

percent ‘‘would not be consoled.’’ Another 45 percent wanted to keep watching but 

didn’t want cable, satellite, or new equipment. The remaining 45 percent wanted to 

learn what they had to do to keep watching. So the station staff told them. 

Then, according to KCSM Director of Technology, Michelle Muller, reporting on 

the experience at the PBS Technology Conference last month, the station got a different kind of call. A local retailer begged them to stop sending customers over because there was nothing to sell them. 

Consider a consumer electronics manufacturer’s position. The ‘‘tuner mandate’’ requires TVs to be equipped with digital-reception circuitry, and most households subscribe to cable or satellite and, therefore, don’t need a ‘‘digital-to-analog converter.’’ 

So why build and distribute them? The proportion of digital-TV reception provided 

by converters is steadily dropping. 

51 

On February 28, the FCC Media-Bureau staff issued a report indicating that a 

‘‘natural retirement’’ analog-TV shut-down date—when all analog sets wear out and 

are replaced—would be 2032. As for KCSM, they lost 38 percent of their audience. 

The CHAIRMAN. Thank you all. 

I’m going to have some written questions that we’ll submit to 

you. I believe it would be best if we moved through to every member, if possible, this morning. 

But I do have one question of Mr. Knorr. Tell me, what’s a ‘‘digital cliff’’? 

Mr. KNORR. A ‘‘digital cliff’’ is—the digital signals work differently than the analog signals. You might think of it—people are 

more familiar with cell phones, and an analog cell phone, when 

you’re on the edge of the signal, you could still talk, but it might 

be fuzzy. When you have a digital cell phone, you either can talk 

or you can’t. The signal just goes off. And that is what’s commonly 

referred to as a ‘‘digital cliff,’’ is that it either works or it doesn’t. 

There is no inbetween. There’s no little-bit-fuzzy with a digital signal. 

And so, a cable operator, as many of our members are, that are 

on the fringe of a broadcaster’s signal, they can receive that signal 

today, but it’s very likely that, when the conversion to digital happens, that signal will go away—— 

The CHAIRMAN. Oh, I see. 

Mr. KNORR.—and they will not be able to receive it. 

The CHAIRMAN. They would not receive the signal that would be 

digital, then, right? 

Mr. KNORR. Correct. 

The CHAIRMAN. Even though they were receiving analog, even 

though maybe dimly, right? 

Mr. KNORR. Correct. 

The CHAIRMAN. Thank you very much. 

Senator Inouye? 

Senator INOUYE. Thank you very much. 

The CHAIRMAN. If there’s no objection, we’ll take a 5-minute 

round. That’ll take us an hour. 

Senator INOUYE. Mr. Fritts, before I proceed, I gather that this 

is your last year as President and CEO. If that’s the case, I wish 

you very well. 

Mr. FRITTS. Thank you very much. I appreciate it. 

Senator INOUYE. Thank you for all your service these past years. 

I appreciate it very much. 

Mr. FRITTS. Thank you. 

The CHAIRMAN. You’re presuming we won’t get him up here 

again. 

[Laughter.] 

Senator INOUYE. Mr. Lawson just spoke of the successful negotiations he’s had, and you suggested that your broadcasters may have 

some difficulty because you compete with cable operators. Do you 

have any evidence of this? 

Mr. FRITTS. Senator Inouye, we have met with the cable industry, at the request of some members of this committee, on several 

occasions, and have advanced the same ideas that we’re advancing, 

in terms of multicasting, and have been soundly turned away for 

that. And I think it’s for competitive reasons. 

52 

If a local station is able to offer new services—take, for instance, 

the services that the public stations—arrangement that they have 

made with the cable association. They are no threat to the cable 

industry. They don’t compete. These are public stations that are offering additional services. 

Many of the services that broadcasters would offer would be presumed to be somewhat competitive to the cable industry. The cable 

industry, as you know, owns not only the pipe, but they also own 

a large chunk of the programming that goes down that pipe; and, 

therefore, it’s been difficult for us to get a dialogue started. 

And what we’re proposing is the same amount of spectrum be 

used that was approved by the Supreme Court in the 1992 Cable 

Act. And we believe that by not using more spectrum—and, in fact, 

less spectrum in the future—that this will provide additional free 

services to the American consuming public. And I would think that 

ultimately would provide additional interest in cable carrying those 

signals. 

Senator INOUYE. Mr. Knorr, do you wish to comment? 

Mr. KNORR. Yes. We, as a cable operator, someone who’s in the 

field—I like more local content, if it’s real local content. That is 

beneficial for me in a competitive environment. I mean, that’s why 

we carry PBS Kids. I mean, it’s a very valuable—it’s good-quality 

programming for our consumers. 

What we can’t afford to do with our spectrum is carry what may 

be a national weather feed from every broadcaster in the market 

that’s completely redundant, or to carry additional shopping channels from broadcasters, and use up that spectrum. And to say that 

we’re going to use less spectrum is false. Maybe in 10 years, we’ll 

use less spectrum. But, in the short term, it’s critical, as even NAB 

has stated, to provide, where possible, analog and digital signals. 

I mean, that’s a competitive advantage that we want to do, if we 

have the capacity to do it. 

The problem that—as a cable operator, that I have is, we’ve 

spent millions of dollars to invest to create capacity to provide new 

and advanced services; whereas, broadcasters have been granted 

spectrum, and then granted additional spectrum to get through 

this transition for free. And then now they are trying to dictate 

what to do with the spectrum that we paid to install, and not give 

us the ability to manage that to the benefit of our consumers. 

Mr. FRITTS. Just to follow up on that, in terms of multicasting, 

we have said that we would be glad to engage with the Committee, 

both here and in the House, to provide quantifiable public-interest 

obligations on these multicast channels. And we would be happy to 

engage in that dialogue to make sure that these services that are 

going to be offered are relevant to the local community and important to all consumers. 

Senator INOUYE. Do you have any views on down-conversion by 

cable operators? 

Mr. FRITTS. As we embrace this transition and go forward, what 

we’re proposing is what the former Chairman of NCTA proposed, 

Michael Willner, in testimony before Congress, wherein he supported legislation and positions saying that analog sets should be 

carried in analog and digital sets should be carried in digital as we 

go through this transition. 

53 

Ultimately, the transition will be over, analog will be shut off, 

presumably at a date in 2009. And, when that occurs, obviously 

that spectrum goes back, much of it, to the cable industry, and, obviously, a large amount, one-third of it, goes back for governmental 

purposes. 

Senator INOUYE. Mr. McSlarrow, do you have any views? 

Mr. MCSLARROW. What happens when you get to the date of the 

transition is that, as Eddie just said, an analog signal goes away 

and a digital signal comes in. So, if you’re a cable operator, you’re 

taking a digital signal, but most of our customers today, and in 

2009, are going to be customers who can only receive an analog signal, one way or another. So, what we have proposed is that we 

down-convert the digital signal to make sure everybody who has 

got an analog receiver is going to receive an analog signal. But recall that even today many people are digital cable customers and 

receive many digital channels. That will still be the case in the future. And, in fact, it’ll be increasing in numbers. And many—and 

we’re hoping growing numbers—receive high definition today. And 

that will continue to be the case, and into the future. 

So, in terms of our proposal, the transition is seamless. People, 

from 1 day before to the day after, will not notice a difference. 

There is a semantic difference between what NAB is saying and 

what we’re saying, that makes all the difference in the world. 

We’re saying, give us the flexibility to down-convert. We’re the ones 

who have to respond to the customer. We don’t deliver, they go to 

my colleague over here, two steps down. So, we have every incentive. The government can’t give us any more incentive to make this 

work right for our consumers. 

What Eddie, and NAB are saying is, instead, force us to carry 

both the digital signal and the analog signal for every must-carry 

station in every market for every operator in America. And they 

don’t all have the capacity. 

Mr. FRITTS. And we’re not—if I could follow up on that—we’re 

not suggesting that cable systems that don’t have the capacity be 

burdened with this. The Supreme Court said one-third of the capacity on cable carriage, and very few, if any, cable systems have 

approached must-carry of up to one-third of channel capacity in 

this. And so, what we’re saying is, when the conversion date occurs, 

in 2009, analog signals go away, and then it all becomes digital, 

and then analog spectrum goes back to the government, and the 

cable industry recaptures that which was being used to transmit 

the analog signals. 

Senator INOUYE. My time is up, Mr. Chairman. 

The CHAIRMAN. Yes. I would urge that—I assume the witnesses 

can see the lights, as we can see them, I hope, but we are on a 

tight time frame here this morning, so I would hope that we’d stay 

within 5 minutes. 

Senator McCain? 

Senator MCCAIN. Thank you, Mr. Chairman. 

I am concerned about a lot of aspects of this issue, and a lot of 

them are being explored by other questions, but I’m most concerned 

about the freeing-up of spectrum for first responders. Events in 

London indicated that this should reinforce our view of this as a 

compelling issue. 

54 

As you may know, I served on the Commission that the President appointed to examine the weapons of mass destruction issue. 

Every witness before that Commission said they believed there 

would be another attack on the United States. Today, our first responders do not have the ability to communicate with each other. 

So, I have a simple question. And now we’re looking at December 

31, 2008, which is two and a half years from now. I’m not sure that 

the United States of America can wait that long. I have one question for the panel. What do we need to do to free-up this spectrum 

for first responders as quickly as possible, and how soon can that 

be? 

And I’ll begin with you, Mr. Lawson. 

Mr. LAWSON. Senator, I believe the key is to provide for a smooth 

transition for the over-the-air—— 

Senator MCCAIN. How long would that be, Mr. Lawson? 

Mr. LAWSON. Well, we’re not afraid of an end-of-2008 hard 

date—— 

Senator MCCAIN. End of 2008. 

Mr. LAWSON.—but there has to be—I believe that even if you establish a hard date, it could fail. You could end up pushing that 

date back if the consumer side of this transition is not carefully, 

carefully managed. 

Senator MCCAIN. Mr. Slenker? 

Mr. SLENKER. Senator, we would agree with the date that the 

Congress put forth, in terms of a hard date. I do—— 

Senator MCCAIN. You know, we’ve had hard dates before, Mr. 

Slenker. 

Mr. SLENKER. Yes, and what I was going to say is that I think 

the hard facts of the matter are that there are hundreds of millions 

of analog television sets in use in the United States. And so, that 

date should—and I agree with you—should be based on a date that 

is something that can be achieved, while also providing the coverage that’s required by consumers and the American public. 

Senator MCCAIN. Go ahead, Mr. Knorr. 

Mr. KNORR. I think we could support an end-of-2008 hard date. 

The issue for us is—just as everybody has articulated—would be 

consumers. And for—as a cable operator, if we have the flexibility 

to manage our bandwidth and our capacity, I think we’ll be in a 

good position to help manage that transition. 

Mr. MCSLARROW. If you told us today that we were going to move 

to a hard date, we’d need 18 months to re-engineer our facilities 

to do down-conversion. And so, we’ll be ready whenever you set a 

date. 

Senator MCCAIN. How would that happen, to get it done in 18 

months, Mr. McSlarrow? 

Mr. MCSLARROW. Basically, we have to go into each of our cable 

headends and re-engineer them, and allow for the digital signal to 

go analog out. Some clearly would happen earlier than 18 months, 

but to get them all done throughout America would be about 18 

months. 

Senator MCCAIN. And that would mean provision of set-top boxes 

for over-the-air television viewers? 

Mr. MCSLARROW. No. In this case, if we do it at the headend, we 

won’t have to do truck rolls, and it won’t require delivering set-top 

55 

boxes to each consumer. We could just—we can re-engineer the 

cable headend to take care of all the customers delivered service by 

that headend. 

Mr. ABUD. Senator, we’re ready, and we support a hard date. But 

please remember that the hard date is only one component in the 

big puzzle of this new transition. But, as far as a broadcaster, I’m 

currently broadcasting analog and digital. So—— 

Senator MCCAIN. Yes, I know you are. I know very well that you 

are. In fact, you will continue to broadcast analog, which is what 

we need for the first responders now, for many, many years. And 

if the 85 percent penetration rule continues, as Chairman Powell 

stated before this committee, it could be decades—decades before 

we get the analog spectrum for the first responders. 

Mr. Abud, what do I tell the Fire Chief and the Police Chief in 

my home state, in Phoenix, Arizona? What do I tell them? That 

they’re not going to get this spectrum that they need to communicate with each other until you decide that every ‘‘i’’ is dotted and 

every ‘‘t’’ is crossed? 

Mr. ABUD. Senator, we’re ready. And—— 

Senator MCCAIN. Tomorrow. 

Mr. ABUD. The headend is only one part of this puzzle, but we 

are ready—— 

Senator MCCAIN. You’re ready to give up your analog spectrum 

tomorrow to the first responders. 

Mr. ABUD. In most of the stations we are, and we will be ready 

by December 2008. 

Senator MCCAIN. Mr. Fritts? 

Mr. FRITTS. Senator McCain, we understand the December 31, 

2008, or somewhere in 2009, hard date. We assume that the 85 

percent goes away as a part of the—enacting legislation that 

you’re—— 

Senator MCCAIN. Although you supported strongly the 85 percent 

rule as it was put in previously. 

Mr. FRITTS. That is true. And I will say to you—— 

Senator MCCAIN. Knowing full well that it would take decades, 

as Chairman Powell stated, before there would be 85 percent penetration? 

Mr. FRITTS. I will say to you that our board met just 3 weeks ago 

and indicated that we would accept a hard date, as selected by this 

committee, and understood the fact that when that hard date took 

place the 85 percent would go away. And that’s the position that 

the NAB is taking now. 

Senator MCCAIN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Burns? 

Senator BURNS. When the cables—Mr. McSlarrow, when the cables talk about—or Mr. Knorr—I think—better directed at him. 

You spoke awhile ago about free spectrum and the transition over. 

And what spectrum do you use in a cable business that you had 

to purchase? 

Mr. KNORR. What we have to do is, we have to invest in the electronic hardware that is installed in people’s backyards that deliver 

the signal to the homes. And those vary—— 

56 

Senator BURNS. In other words, when you talk about that, you 

don’t talk about spectrum, you talk about capacity, as far as bandwidth, is that correct? 

Mr. KNORR. Correct. 

Senator BURNS. In other words, you just buy a bigger pipe. 

Mr. KNORR. Well, we have to—yes, we have to upgrade our technology, and we use spectrum up to—cable operators use it up to— 

one gigahertz is the spectrum we use, but it is confined to the wire 

and is not over-the-air spectrum. 

Senator BURNS. That’s what I thought. When you talk about 

spectrum, you talk about bandwidth on a wire. 

Mr. KNORR. Correct. 

Senator BURNS. You didn’t purchase that. You purchased it because you had to buy a bigger wire, more than anything else. 

Mr. KNORR. Correct. 

Senator BURNS. But you’re going to have to have some sort of a 

wire, whether it be optics or whether it be cable or copper. And, 

of course, all of that is—the old copper and the old cable is gone. 

In other words, you’re in optics right now, and that’s where the future is, because that gives you increased capacity without increasing the size of your pipe. And that sometimes is—the American 

public, they don’t understand that. Spectrum is—spectrum is what 

we use over-the-air. That’s what you buy, or that’s what you have. 

And that’s where I’m going. 

Mr. KNORR. I think an important consideration is that, either 

way, it’s capacity. And just like the—a broadcaster could not broadcast a digital and analog signal on the capacity they had 15 years 

ago; they had to get additional capacity, and that’s in the form of 

over-the-air spectrum. And, in our case, that additional capacity is 

in the form of more expensive wires and fiberoptics. 

Senator BURNS. If they operate all of those in six megahertz, 

does that impact on your capacity? 

Mr. KNORR. If they could provide the analog signal, and the HD 

signal, and the multicast all in the six megahertz, it is true that 

it would not impact us. However, that is not the case. It’s misleading to say that cable gets that spectrum back, because, as Mr. 

McSlarrow said, the customers can—will continue to have analog 

sets past 2009. And unless you want to increase the problem and 

make it larger, cable operators need the flexibility to down-convert 

and to help make that problem smaller. 

Senator BURNS. But could they operate in that six megahertz? 

Could you broadcast an analog and a—— 

Mr. KNORR. No. 

Senator BURNS.—digital signal in that six megahertz? 

Mr. KNORR. No, we cannot. 

Senator BURNS. OK. 

The CHAIRMAN. Can I ask a question? It won’t—— 

Senator BURNS. Yes. 

The CHAIRMAN.—come off your time. Won’t you be sending a digital signal to your digital subscribers at the same time? 

Mr. KNORR. Yes. 

The CHAIRMAN. But you say—— 

Mr. KNORR. But we’d need additional capacity to do—— 

57 

The CHAIRMAN. When a broadcast signal comes through, it has 

to be down-graded to analog. 

Mr. KNORR. For it to reach analog sets, we’d have to down-convert it, so that’s all I—that’s our spectrum problem, is, we have to 

send out multiple signals to our customers. 

The CHAIRMAN. What about the subscribers out there that have 

gone digital? 

Mr. KNORR. We would send out a digital signal to them, where 

we have the capacity to do—— 

The CHAIRMAN. Digital for the over-the-air/must-carry group. 

You say you would downgrade the analog signal. So it would be 

passed through only as analog, right? 

Mr. KNORR. I’m sorry? 

Mr. MCSLARROW. Mr. Chairman? 

The CHAIRMAN. Isn’t that right? Am I hearing right? 

Mr. MCSLARROW. You are right. I mean, what we’re suggesting 

is that we take the digital signal and, for the analog customers, 

down-convert it to analog. The digital customers are going to receive many of the same digital signals they receive today. 

The CHAIRMAN. But are you transmitting that over-the-air broadcasted digital signal to that digital—— 

Mr. MCSLARROW. In most cases, yes—and increasing. 

The CHAIRMAN. In most cases. 

Mr. MCSLARROW. In most cases. And there may be a station 

somewhere, where we don’t have enough capacity to do both, but 

it is our intent today, just as we do today, to continue doing both. 

The CHAIRMAN. I’m sorry. Mr. Burns? 

Senator BURNS. I’m going to sit here and listen, because I’m— 

I would turn back the balance of my time. I’ve just got some questions that have to be asked, sort of, privately, so go to the next person. 

[Laughter.] 

The CHAIRMAN. You shouldn’t say that. You shouldn’t say that. 

That’s—— 

Senator BURNS. Why? If they can be private, I can be private. 

The CHAIRMAN. Yes, sir, you may. 

[Laughter.] 

The CHAIRMAN. You’re the boss. Sorry to interrupt you, though. 

I didn’t mean to interrupt your train of thought. 

Senator BURNS. No, I’ve got—go to the next guy. 

The CHAIRMAN. All right. The next person, then, is Senator 

DeMint. 

Senator DEMINT. Senator Burns, I probably should ask mine privately, too—— 

[Laughter.] 

Senator DEMINT.—because I’ll show my ignorance here. 

But I’m trying to imagine the industry in a few years, with a lot 

of new technology. I know Mr. Fritts is—one of the issues that’s 

difficult for you is the required multicast on cable, DIRECTV. But 

you will continue—broadcasters will continue to broadcast a digital 

signal. Am I correct? I mean, it will be a broadcast signal that I 

could still receive at my home with digital receiver capabilities, correct? 

Mr. FRITTS. That’s correct, yes, sir. 

58 

Senator DEMINT. In the future, if I wanted to be hooked up to 

my local cable operator to receive all the channels I wanted, but 

also have a little switch where I could receive ten multicast stations from my local NBC affiliate, that that technology is not difficult, correct? 

Mr. FRITTS. Depending on whether you get close enough to the 

television station to get a good signal, that’s correct. 

Senator DEMINT. Right. If I’m within—whatever—I can receive 

that. So, it sounds like with—in the future, that if I want multicast 

local television programming, if I want to receive dozens of 

multicasts from my local affiliates, that I could easily have that 

technology available, if, as a consumer, I wanted it, at no additional cost to myself, because you’re going to continue to broadcast 

that digitally. Is that correct? 

Mr. FRITTS. That is correct. 

Senator DEMINT. OK. So, the argument that we must force these 

cable folks to carry five or ten stations from all broadcasters, in my 

mind, is somewhat questionable that that needs to be a government mandate if, as a consumer, I can receive it free, with probably a little additional technology at home. 

Mr. FRITTS. Senator DeMint, you have the same situation today 

that this committee and this Congress, in 1992, looked at and 

thought that there was a governmental interest in carrying local 

television stations on the cable system. And it went to the Supreme 

Court. 

Senator DEMINT. You’re talking about primary carry. 

Mr. FRITTS. I’m talking about the carriage. And what we’re talking about now is not increasing the bandwidth or the space that’s 

used; we’re talking about—when we are all digital—let’s say, in 

2009—we’re talking about returning all of our analog spectrum, 

which is a third of what we use now; plus, the cable gets additional 

spectrum, because we are taking the analog signal off of cable, because we’re broadcasting only digitally. 

Senator DEMINT. Right. But you are talking about using the 

transition to digital as a way to get additional requirements of stations that you broadcast imposed on cable and DIRECTV. I mean, 

this was—— 

Mr. FRITTS. It’s the same amount of space. If we wanted to slice 

that space up and have one HDTV channel, it uses the same 

amount of space. If, on the other hand, the broadcaster wanted to 

provide additional services for the local community—and, again, 

we’ve agreed that we would be happy to sit down and discuss quantifiable public-interest obligations of broadcasting local services for 

that—so, we’re using the same amount of spectrum, we’re just slicing it, for a period of time, to multicast. 

Senator DEMINT. I understand. Thank you, sir. 

I yield back, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Allen? 

STATEMENT OF HON. GEORGE ALLEN, 

U.S. SENATOR FROM VIRGINIA 

Senator ALLEN. Thank you, Mr. Chairman. 

59 

The questions from Senator Inouye, I thought, got the folks engaged in trying to get this into a practical understanding for us, 

as well as the questions of Senator DeMint. 

My goal, by the way, in all of this, is to get to wireless 

broadband, which I think is very important for rural areas. And I 

understand the needs for public safety and so forth, but I think the 

innovations and the technology advancements, particularly in getting wireless broadband into rural areas—for that matter, anywhere else—as another option is the most compelling reason for 

this. 

Hearing all the witnesses here, they’re all for a general hard 

date, as opposed to—including listening to Mr. Fritts and the 3- 

week-old position of the National Association of Broadcasters—and 

just having a hard date, rather than some quantifiable level of capabilities for customers, consumers, to receive over-the-air broadcasting, which gets to the main problem that I—you’re all talking 

about all of your different angles and what’s your competitive advantage, one way or the other. And I understand. I don’t like government mandates. I’m thinking, though, of how many television 

sets right now are not capable of receiving digital broadcasts, 

whether via cable, via, obviously, over-the-air, and, I suppose, as 

well, on satellite. 

The reality is, my household is probably like many others who 

receive cable, and that is, you have certain TVs that are on cable, 

and you have some TVs that are over-the-air. In your family room, 

it’s cable. Maybe your bedroom, it’s cable. But then, in the kitchen, 

the guest bedroom, so forth, if you have a little TV, it’s over-theair. 

So, if you could—our experts here, could you share with us just 

the very practical problem of not wanting TVs to go off. If you want 

an uproar from the people of this country, have their TVs go off. 

And I find it very interesting that the date for this is December 31, 

2008, as opposed to the Summer of 2008, where you know darn 

well what the issue would be, in all of those elections. And it’s 

about a bunch of irate people who, whether they live in cities or 

out in the country, are upset that this isn’t working out, or you 

have folks coming in, putting set-top boxes on. 

So, here’s what we need to solve. How can we make sure that 

these investments that people have made in these TV sets—and, 

unfortunately, TV sets are being sold, today, that are not digitalcapable. I understand the marketplace. The reason for it is that 

those digital TV sets cost substantially more than an analog set, 

so people make that decision. 

If any of you could share with the Committee and the American 

people how many TVs right now—if this were done, let’s say, next 

month, how many TVs would not be capable of receiving a digital 

signal? And then, what is a practical way that we can absolutely 

ensure, as best we can, logically—and we’re never—it’s never going 

to be perfect, especially when the Government’s involved—but, how 

can we assure that, when this date occurs, you’re not going to have 

a lot of people with sets that they turn on, on that morning of January 1, New Year’s Day, not on for broadcast airwaves? 

60 

Mr. FRITTS. We have done some research on that, Senator Allen, 

and what we’ve learned is that there are roughly 20 million homes 

that are not connected to cable or to satellite. 

Senator ALLEN. How many television sets are not? 

Mr. FRITTS. Seventy-three million television sets are unwired in 

today’s marketplace. We have entered into a joint venture to help 

build—or to help get an RFP started to build a converter box that 

will convert those over-the-air sets and make them digital-capable 

through the converter box. Now, they’re analog sets with a converter box that’ll down-convert the digital signal, and hopefully in 

the $50 to $70 price range. 

There has been a discussion at this table—and in the House, as 

well—about some form of taking some of the money from the auctions and providing that for a subsidy. Our position on that is to 

leave that to you, Members of Congress, as to determine best how 

to go about that. 

The numbers that we’re quoting are also essentially the same 

numbers the GAO is reporting, and also the same numbers that 

the Consumer Federation reported. Actually, the Consumer Federation was a little higher than ours. 

So, if, on January 1, 2009, all analog broadcasting ceased, we 

would have to have an education campaign in advance of that. We 

would have to have converter boxes—which, by the way, we’re willing to undertake—over-the-air radio and television is willing to undertake this campaign to help assure that Americans—— 

Senator ALLEN. Let me interrupt, because my time is running 

out. 

Mr. McSlarrow talked about the down-converting as—that’s only 

going to work, though, for those television sets that are actually 

hooked up to the cable. It seems to me a logical approach. What’s 

your view on allowing them to do that, rather than having to put 

boxes on sets that are hooked up to cable? 

Mr. FRITTS. As long as all stations in the marketplace are covered, we agree with that. We think it makes sense. 

Mr. ABUD. Senator, just quickly, if I may? 

Senator ALLEN. Sure. 

Mr. ABUD. Just remember that in the case of the Hispanic audience, 43 percent of my audience rely on over-the-air television. 

And, ironically, this segment of the population relies more on the 

services we provide as a local television station. 

Senator ALLEN. So, you would see this as a practical problem, 

going into those households of your population that you’re talking 

about, and putting in boxes—set-top boxes. 

Mr. ABUD. Yes. 

Senator ALLEN. Thank you, Mr. Chairman. My time’s up. 

The CHAIRMAN. Senator Rockefeller? 

STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 

U.S. SENATOR FROM WEST VIRGINIA 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

And I, like Senator McCain, have a variety of areas of interest 

in this, but none more important than the first-responder. 

The year 2008—and I agree with the Constitutional State of Virginia Senator’s analysis, it’s a little unsettling. Some could—said 

61 

you could do that before that, but we need to free up spectrum for 

first responders. I don’t know how many people think that there 

will be an attack on this country before 2008, or before 2007, but 

my guess would be it’s a majority of people, who know what they’re 

talking about. And so, this isn’t just, kind of, a telecommunications 

discussion; this is a question of questions, bottom-line matters. It’s 

also a question of national responsibility, national security, which 

changes the whole debate. 

So, to me, we need to have a significant portion of the spectrum 

proceeds to be set aside for first responders, some of whom are— 

just don’t have the infrastructure—or maybe I should say, many of 

whom don’t have the infrastructure to be able to receive what they 

will need. And so, you know, I fully support making first responders in New York City and Los Angeles fully able. I also know very 

well the situation in my own state, which is a highly rural one, 

where first responders cannot communicate with each other. I’ve 

met with, I think, virtually all of them and—in the counties—and 

some of them still use 911 when they’re trying to get attention. 

And I don’t like that. I don’t know how much money’s going to be 

available, in terms of the spectrum. Senator McCain’s bill talked 

about a billion dollars. That was a good start on it. But the auction 

of the broadcast spectrum provides an opportunity to be able to 

help some of these first responders. And I’m interested in the difference between the need to help them and the question of running 

a business, and how those two may or may not conflict. 

[The prepared statement of Senator Rockefeller follows:] 

PREPARED STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 

U.S. SENATOR FROM WEST VIRGINIA

Mr. Chairman, thank you for having this hearing today. Mr. Chairman, I know 

we have a number of witnesses before us today so I will be very brief. 

I support the adoption of a hard date of January 1, 2009, as you have suggested 

for completing the digital television transition. I believe that we must move as 

quickly as possible to free-up the broadcast spectrum for our first responders. 

As importantly as freeing-up spectrum for first responders is, I believe we should 

seriously consider setting aside a significant portion of the proceeds of the spectrum 

auction for grants to first responders for emergency communications equipment and 

infrastructure. 

I fully support making sure first responders in urban areas have the spectrum 

they need, but for West Virginia, at least, the biggest obstacle to creating an interoperable public safety communications network is not available spectrum, but rather available funds for equipment purchase. I know our Co-Chairman knows very 

well the tightness of the budget for the foreseeable future. The auction of the broadcast spectrum provides a source of funding that our first responders urgently need. 

Much of the discussion today will center on how to make sure consumers are not 

left in the dark after the transition to digital television. I believe that the Committee should create as a robust consumer subsidy plan as necessary to make sure 

no one will lose their over-the-air signals. 

Finally, I believe the Committee needs to address the size of the blocks of spectrum that will be auctioned off from the transition. Because spectrum is sold in 

large blocks, my state often does not see the level of investment in wireless technologies as it might otherwise. I believe we need to allocate smaller blocks of spectrum so smaller companies in rural areas can purchase spectrum to build wireless 

networks where larger national companies choose to not to invest. 

Again, thank you for holding this important set of hearings, and I look forward 

to hearing from our panel. 

Mr. MCSLARROW. Well, Senator, I’ll take a crack at it. I think— 

the way I think about this is, there are really two large groups of 

62 

people out there who are affected by the transition, in terms of the 

spectrum—— 

The CHAIRMAN. They can’t hear you in the back of the room. 

Mr. MCSLARROW. Is that better? OK. 

Two groups of people. One are the over-the-air customers of 

broadcasters. The other are cable and satellite. There is one set of 

issues related to those customers who are over-the-air. But, in our 

case, there are really two ways of coming at this. If the spectrum 

goes away for the public safety purposes you just identified, which 

we all in this room acknowledge are important, either you can 

hand everybody a box—$67 for a box, for a cheap digital-to-analog 

converter, $200 for a fully interactive two-way box—or you can 

allow the cable industry to spend its own money and down-convert 

at the headend. And the difference is, if you had to hand everybody 

a box, it would be about $9 billion. Some of that, most of that, 

would probably have to be subsidized by the government, because 

there’s no principled reason why a cable customer should not receive a subsidy if over-the-air customers are receiving a subsidy. 

We’re proposing a solution that means you don’t have to deal with 

that at all. We’ll take care of it. 

So, that’s the tradeoff, in terms of the two types of universes that 

you have as a business matter, taking into account the important 

public policies that you’ve identified. 

The CHAIRMAN. For the information of everyone, this afternoon— 

that covered system there—we will demonstrate the signal that 

will come over on analog or on digital to—this afternoon. 

Mr. SLENKER. Currently, DIRECTV, as part of its service, provides boxes that, in fact, do this. And we provide that equipment 

today for free, as a part of this monthly subscription that takes the 

local channels in the 130-plus markets and analog-to-digital converts them, so that, on a regular analog set at home, a digitized 

version of the local stations are there. And I’d like to think that’s 

part of the growth that satellite has experienced. It hasn’t all come 

from cable; it’s come from some over-the-air folks that now are able 

to get good, crisp, digital signals of their over-the-air stations locally, now through this satellite technology. 

Mr. KNORR. I think there is an important piece that is almost 

whizzing by. A lot of times—NAB’s numbers, when they talk about 

cable getting spectrum back, or they talk about only this many million customers being affected, they’re overlooking—both of those 

can’t be true at the same time. If only that many customers are 

going to be affected, cable has to have the opportunity to down-convert and offer signals to those analog customers that don’t have a 

box, or else that problem becomes infinitely larger, as much as tenfold. 

To use your example, those TVs, if you’re a cable customer, 

they’re not being counted in NAB’s numbers, because you have 

cable, so obviously you have those signals. And, through cable, if 

we can down-convert and continue to provide analog signal, you 

can get those—you can hook those up to cable. I mean, that’s the 

advantage of cable. 

In rural markets, some of those systems don’t have the capacity, 

and they may even need assistance to down-convert those signals, 

but those customers will not suffer, as NAB describes, by not being 

63 

able to get the digital signal, because of my friend to the left. I 

mean, those markets are competitive. If a cable operator doesn’t 

have the capacity to offer those digital signals, they can still get 

those digital signals, and that becomes a free-market competitive 

issue to determine whether or not that cable operator can afford to 

upgrade its capacity. 

Senator ROCKEFELLER. OK, can I—Mr. Chairman, can I just— 

thank you for allowing me to interrupt and point out that the funding for first responders is about a half-billion dollars, so far, less 

than it was last year. So, I think this is—puts, in some conflict, 

bottom-line thinking and national need. 

Thank you. 

The CHAIRMAN. Senator Ensign? 

STATEMENT OF HON. JOHN ENSIGN, 

U.S. SENATOR FROM NEVADA 

Senator ENSIGN. Thank you, Mr. Chairman. 

I want to make a couple of points, and then get to a couple of 

quick questions. 

You know, if we’re looking at this from the consumer standpoint, 

in my mind, the more free-market this is, the less governmentmandated it is. The bottom line, the consumer’s going to benefit in 

the end. We do have some national security concerns with the first 

responders, especially today, that indicate the importance of freeing-up this spectrum. As far as jobs in the United States, the innovation that can happen if this spectrum is freed up, we can’t even 

imagine the type of technologies that will develop when this spectrum is freed up. There are a lot of compelling reasons. And I’m 

glad to hear everybody—that everybody is for a hard date today, 

and we need to make that, and we need to stick to a hard date. 

And I think some of the concerns that we’ve heard today about— 

Senator Allen, when you talked about making sure that nobody’s 

set is turned off. A lot of this, and almost all of it, is really just 

a technology issue. It really is. None of those sets need to be turned 

off with a hard date. It’s a question of how, though, we do the subsidy, how we get those converter boxes to those analog televisions. 

And I believe that all of that can be worked out amongst the Committee, as we move forward with a bill. 

What I want to get to is, because we’ve heard about this downconversion, and there are different issues, from what I understand—down-conversion cable versus satellite. Because we heard 

about the capacity on this must-carry. We’ve heard the broadcasters say that they want basically the same amount of spectrum 

that they have today. When they give up the analog spectrum, they 

just want the same amount of spectrum they now have on cable. 

From what I understand, especially with satellite, that’s different. 

You’re going to need—if you have that down-conversion, you’re 

going to have limitations, when you down-convert, on what you 

could carry. And it would hurt local-in-local programming on the 

satellite if all of these must-carry channels were required for you. 

Mr. Slenker, could you address that? 

Mr. SLENKER. That’s absolutely correct, Senator. I think, as 

we’ve pointed out, we have fixed licensed spectrum for satellite, 

and we literally count the amount of digital bits today that we can 

64 

fit into that fixed spectrum. We use state-of-the-art compression 

technology to maximize the number of local stations in a spot-beam 

market-by-market fashion, to squeeze as many markets within the 

United States with the full number of stations in that market. But 

should we be required to carry additional content in those markets, 

that will exceed the available—not only the available spectrum, but 

also the state-of-the-art, in terms of technology. 

Senator ENSIGN. I want to explore this whole must-carry, you 

know, today versus what the broadcasters would like to see in the 

future. Mr. Fritts, your—let’s just say, for instance, that some kind 

of compromise was reached, and, instead of everything that you 

want, there was, you know, one or two stations, or whatever, additional that you were putting in the pipe. And a lot of the argument 

has been because of local programming. OK? Would you support, 

for instance, say, something like that, if a compromise was reached, 

an additional station, or whatever it was, that the 80 percent of the 

content is original local programming—that kind of a test for that 

addition? 

Mr. FRITTS. Senator Ensign, I think what we would be happy to 

do is sit down and figure out what makes sense, what the right 

number is. I don’t know if it’s 80, or 50, or 40, or whatever the 

right number is. But, please understand, we would be happy to sit 

down and guarantee that there would be quantifiable public-interest obligations on those additional channels that would be under 

the multicasting rules. 

Senator ENSIGN. The reason I bring this up is because I think 

that the consumers are really the ones who will make the choice 

in the future. In other words, if—you know, the consumer’s not 

going to want 82 shopping channels or 82 weather channels, or 

whatever it is, and—because I guarantee if cable—if the consumer 

wanted it, and cable wasn’t providing it, these satellite guys will. 

And if the consumer—if your content is good enough, if your demand is good enough, they’re going to have to carry it. And it 

would seem to me that the consumers making the choice when 

we’re going through, that’s—we should not be picking the winners 

and losers here. We should be allowing the consumer to pick the 

winners and losers amongst you, and let you all compete. And, you 

know, some of you might have a little bloody nose at the end of the 

day, but the bottom line is, is that’s what a free market is supposed 

to be about, is government not picking the winners and losers, or 

at least as much as possible. 

Now, we are making a transition—and there are always winners 

and losers when you go in a transition area—but, in the future, we 

need to get out of this business, as much as possible, and let you 

all compete, as much as we possibly can. 

Mr. Chairman, I think that in the future, as we go to this—you 

know, determining the subsidy, that is something that we’re going 

to have to determine. You know, should it be a government fund? 

Should it be a private grant out there that people can apply to? 

Should it be means tested? Should—all of those issues need to be 

addressed, because I don’t believe that, you know, people like myself—maybe I do have a—you know, a set in the back, you know, 

that—I don’t think that I should get a government subsidy just because I have to—if I want one of my analog sets to have a conVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00068 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
65 

verter box—you know, whether they’re $40, $50, $60—I just don’t 

think that somebody in upper income should have a subsidy. But, 

for some people, for some seniors who, necessarily, can’t afford it, 

some kind of subsidy should be available for those. And the technology, then, would take care of that. 

So, thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Snowe? 

STATEMENT OF HON. OLYMPIA J. SNOWE, 

U.S. SENATOR FROM MAINE 

Senator SNOWE. Thank you, Mr. Chairman. 

Well, obviously, there is a governmental interest in this whole 

process, because the Government is requiring people to make investment in digital television, of some kind with this hard-fast 

date, for the obvious, you know, good public-policy reasons, because 

we need the spectrum for first responders, and otherwise. 

My concern is continuing to preserve the free over-the-air television, and whether or not we’re going to undermine local programming on the question of whether or not cable is required to carry 

multicasting programming. And, really, that’s the essence for me, 

because, in the final analysis, we have to ensure that local programming continues. 

Frankly, I don’t happen to think it should be, sort of, an option. 

I realize you’d have to, you know, download the analog signal, but 

I’m trying to figure out what is the picture in the future. 

And I would like to start with you, Mr. Fritts. What is the picture in the future if cable is not required to carry multicasting programming? What would that mean for local programming, primary 

broadcasters, from your standpoint? 

Mr. FRITTS. If cable were not required to carry any of the 

multicast channels—— 

Senator SNOWE. Right. 

Mr. FRITTS.—67 percent of the households, presumably, would 

never get a chance to sample those, never get a chance to see them, 

never know that they are there. And, while there are 70 million 

sets in 20 million households, probably not enough to sustain a 

substantial market. 

Currently, if public interest obligations were imposed on local 

broadcasters, which they are currently under the governmental interest and must-carry regime, what we’re saying is, actually, when 

we turn the analog off, and cable compresses the six megahertz, it 

becomes three megahertz; and so, they get 50 percent back at the 

end of the transition. And what we’re saying is that if there is local 

programming that deserves to be shown by local people, then the 

local cable monopoly ought to carry it. 

Think about this. Comcast owns everything on the eastern seaboard, with the exception of Fairfax County. Cable has a very 

strong monopoly position. They can tell a broadcaster what gets on 

and what doesn’t get on in this current regime. There’s only one 

cable operator in all of these regions, and there are not two in Fairfax County, there are not two in these areas up and down the eastern seaboard. So, with their monopoly power, we think that it’s 

66 

only fair that local broadcasting be continued and furthered by virtue of must-carry. 

Mr. ABUD. If I may, Senator, in the case of Spanish-language television, we have a very close relationship with our audience. We 

provide them with news and information locally that they cannot 

get anywhere else. By not forcing the cable companies to carry our 

signals, we will be keeping the benefits of digital television from 

the consumer. And, you know, because of that relationship that 

we’ve established with our audience, we think that’s crucial for this 

segment of the population. 

Senator SNOWE. Mr. McSlarrow? 

Mr. MCSLARROW. Senator, I will avoid the use of the tired, hackneyed term ‘‘monopoly,’’ which everybody throws around. The fact 

is, the only person who can actually force carriage on anyone is a 

broadcaster forcing must-carry on cable. It’s interesting, cable networks can go up to a broadcaster and say, ‘‘Hey, carry me. The law 

tells you to.’’ So, that’s the state of the law. We live with it. 

In the future, with multicasting, what’s not being said today is 

that we have an agreement, as John Lawson said, with the public 

television stations all around the country to carry their multicast 

signals. We carry, today, 500 multicast signals around the Nation. 

It’s all voluntary. We have C–SPAN cameras here that the cable 

industry funded as a public-interest obligation. 

Senator SNOWE. But I understand—— 

Mr. MCSLARROW. It’s all voluntary. 

Senator SNOWE. Yes, I understand that. But, in the absence of 

any requirements, what ultimately happens? That’s optional. It’s 

voluntary. But if the Government views that there’s a public interest in continuing free over-the-air television, that you have local 

programming, where does that stand in the long-term future, beyond 2009? And it is no different than the 1992 Cable Act, when 

we required a must-carry provision. I’m not sure I see a major distinction in that regard. We’re just moving to an advanced stage of 

technology now, that we’re requiring, we’re imposing on consumers. 

But yet we don’t want to lose the public interest of having free 

over-the-air television. 

That’s what I’m grappling with here, because I really do see that 

as the essence—— 

Mr. MCSLARROW. I don’t think—— 

Senator SNOWE.—of what it’s all about. 

Mr. MCSLARROW.—I don’t think anybody disagrees with the importance of over-the-air broadcasting. And I have no doubt that it 

will maintain a viable presence in the future. And I have no doubt 

that, just as we do today, voluntarily, we will increasingly carry 

multicast signals from many commercial broadcasters, as well as 

the public television stations around the country. That is a different thing from saying that, in every circumstance, multicast carriage should be mandated. 

Mr. KNORR. I’d like to even further expand on that. Where we 

see—I mean, there are many broadcasters that barely make the 

minimum requirements for local content today with their primary 

signal. In addition, as the question was asked earlier about an 80 

percent local content, and the response was, ‘‘Oh, maybe that 

should be 60, or 40, or whatever make sense, as long as it’s measVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00070 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
67 

urable.’’ Well, 1 percent’s measurable. I mean, what—how much 

local coverage there is from broadcasting is going to be up to broadcasters, not cable companies. 

In our market, we’re not a Comcast, we invest in a local channel 

that we carry only on our cable system, and it is the only local coverage for the markets we serve. The broadcasters don’t serve that. 

We step up, as a cable operator, and do live 6 and 10 o’clock news 

to cover our market area, because local is very important. 

So, I think, as a cable operator, I am happy to embrace local, as 

long as it’s really local and not just a facade of local to put in a 

shopping channel or some other filler. 

Senator SNOWE. Did you want to speak to that? 

Mr. SLENKER. Yes, Senator, if I may. Senator, DIRECTV believes 

so much in the importance of the primary local television signal, 

the single local television signal, that we are, without government 

mandate, spending billions of dollars to build-out the ability to retransmit 1,500 local high-definition signals. So, I would like to 

think we’re in the forefront of delivering those high-definition local 

digital signals to the American public without any kind of government mandate. 

Mr. FRITTS. Well, in fact, they do have a government mandate: 

carry-one/carry-all. If they carry one local, they have to carry all. 

The CHAIRMAN. Senator Vitter is recognized for 5 minutes. 

STATEMENT OF HON. DAVID VITTER, 

U.S. SENATOR FROM LOUISIANA 

Senator VITTER. Thank you, Mr. Chairman. 

I wanted to build on Senator Allen’s comments and questions 

about the challenge of conversion. And I guess my comments and 

questions are really focused by the last several weeks, in my part 

of the world, in Louisiana. 

We had a tropical storm. We barely missed a hurricane. Louisiana is a relatively poor state. We have a much, much higher percentage of non-cable-hookup sets. And so, that over-the-air broadcast is an absolutely essential component for public safety, particularly when we face regular threats on the Gulf from hurricanes. So, 

making sure that every set gets this capability to remain operating 

is no trivial matter, and it’s not merely a matter of convenience. 

It absolutely goes to the core of public safety. 

I’m concerned about first responders, and homeland security, and 

all of that. That’s a legitimate concern essentially on the other side 

of the issue, pushing for quicker conversion. But, in my part of the 

world, the dominant concern is the one I’m talking about with regard to weather and hurricane threats. 

And so, I guess, to be very blunt, I hear this talk, ‘‘Well, it’s just 

a matter of technology. Clearly, this can be done.’’ I think it is a 

much, much bigger project, with a lot more room for pitfalls than 

that sort of throwaway response admits to. I mean, this is a big 

project, to make sure that TV sets, particularly in rural areas and 

where poor folks live, aren’t just shut off. And I guess I’d invite 

some more elaboration on how we really get that done and don’t 

leave people, particularly poor folks and those in rural areas, in the 

lurch, not just for entertainment, but for essential public safety information. 

68 

Mr. LAWSON. Senator, we had an experience in the San Francisco 

Bay area last year. Our station, KCSM, the public station, the community-college licensee, had a tower issue, and they really had to 

make a choice between analog broadcasting and digital broadcasting. They chose digital, and they did everything right. They 

went on the air for weeks and months. They did publicity. They 

tried to negotiate carriage with cable and satellite, with some success. 

The day comes that they turn off analog, and it was chaos. The 

retailers in the area called the station saying, ‘‘Don’t send people 

to us. We don’t have converter boxes to sell them. We can get them 

on the Internet for $400 that will do high-definition TV.’’ But these 

are people—elderly people, who wanted to do their yoga in the 

morning. The station ends up losing 38 percent of its audience 

share. 

I agree. I share your concerns, and Senator Allen’s concerns. We 

can make a hard date, but you’re talking about a major project. 

We’re talking about a Y2K-level project, to convert 21 million people. 

As I said to the listening session, that was a successful model. 

Let’s look at the conversion of the metric system as a model that 

didn’t work. So, it has to be carefully planned. 

And, in terms of public safety, I would like to reiterate that public broadcasters working with our commercial colleagues of all different media are making bandwidth available to the Department of 

Homeland Security for an upgrade to the Emergency Alert System. 

And that will depend, in part, upon over-the-air, but there are 

also—we’re looking to get that signal to all sorts of devices, like cell 

phones. But it still depends on a robust digital over-the-air broadcast signal. 

Mr. ABUD. If I may add, like I was talking about, the—our relationship with the Hispanic community, our consumer really needs 

us. They look at us as a lifeline, which is not the case of the general-market audience. Sometimes they call us, even before they call 

911, to report issues or problems. And in order for us to give them 

better service, just to give you an example, we have initiatives 

right now with the Los Angeles education school district. We are 

the partners to provide support to the parents in how they help 

their kids going through school. Having the multicast will allow us 

to expand on those services, but I need to have the must-carry in 

order for those services to reach all of the population and not only 

those that get over-the-air. 

Mr. FRITTS. Senator, I used to operate radio stations in Louisiana, so I’m familiar with the territory, and also concur that this 

is a herculean problem. But if the Congress says 2009 is the date, 

we will run the necessary campaigns. We’ll help develop the technology to make sure that as few people as possible are displaced. 

Because every time we lose a television set to technology, if you 

will, we’ve lost an opportunity. Our audience falls. 

And we agree with you that local television is so important, especially when you have so many hurricanes, and tornadoes, and bad 

weather that comes through. Not just that, but on everyday local 

information. And we think the best way to do it is to continue the 

69 

must-carry regime that was laid out in 1992, following the governmental interest, which was supported by the Supreme Court. 

Senator VITTER. Can I just interject? How does that continuation 

of must-carry really address the conversion issue I’m talking about? 

I don’t get it. I mean, I’m talking about people without cable. So, 

what does must-carry have to do with that? 

Mr. FRITTS. It doesn’t have anything to do with people without 

cable. 

Senator VITTER. OK. That’s what I’m talking about. 

The CHAIRMAN. Gentlemen, if I may, we’re going to have a follow-on hearing at 2:30 today. I have just a couple of questions, if 

I might ask. I didn’t ask any at the beginning. 

Mr. Fritts, after you go digital, what’s the future of the over-theair broadcasting for those people who don’t want to pay, who want 

their own set free to the consumer, but supported by advertisers? 

What’s the future of that system? 

Mr. FRITTS. We think it’s going to be robust, a robust system that 

will continue providing—it’s going to be in a very competitive 

world, even more competitive in the future than it has been. Broadcasters who specialize in localism, who provide more localism, rather than less, will be successful. Those who scale away from that 

and try to provide just a national service only, in my view, will 

have a more difficult time—— 

The CHAIRMAN. Congress has mandated that we’ll be digital after 

a certain date. 

Mr. FRITTS. That’s correct. 

The CHAIRMAN. But we will have set-top boxes that will reduce 

the digital to analog during the period until the people get digital 

TV, right? 

Mr. FRITTS. That’s the current plan, yes, sir. 

The CHAIRMAN. Now, Mr. McSlarrow, what do we do about the 

emergency over the—emergency concepts in areas that are just totally cable, and cable goes off the air? 

Mr. MCSLARROW. Well, I mean, we have to rely on the fact that 

we have other ways to communicate. 

The CHAIRMAN. I want to know what that is. You know, it’s—you 

don’t carry—you don’t have the ability for emergency broadcasting 

back over-the-air again, do you? 

Mr. MCSLARROW. No, not currently. No, you’d have to rely on either radio, or wireless, or some other form of communication. 

The CHAIRMAN. So, in the things that Senator Vitter is talking 

about—and, God knows, we all have our own earthquakes, and tornadoes, and tidal waves—is over-the-air system still in the national 

interest that we preserve over-the-air, and preserve it in a digital 

basis, if possible? 

Mr. MCSLARROW. Absolutely. 

The CHAIRMAN. Well, then, why do you suggest, once we go 

through the process of converting over-the-air to digital, you want 

to downgrade it to analog until your customers get over the—settop boxes? You don’t want us to provide set-top boxes to your customers. Why is that? 

Mr. MCSLARROW. I think it’s more you don’t want to, because it’ll cost $9 billion; whereas, we can down-convert at the headend, take 

care of this at our own cost, give people exactly the same service. 

70 

The reason we need to down-convert is, we have 40 million households—— 

The CHAIRMAN. But if those customers out there don’t have digital, they’re your guys’. 

Mr. MCSLARROW. Right. 

The CHAIRMAN. They have a set. They could pick up the over-theair digital if they had a set-top box. 

Mr. MCSLARROW. Actually, if they have a digital TV, they could 

pick it up over-the-air, as well. 

The CHAIRMAN. But, by definition, they don’t have a digital TV. 

We’re talking about your—— 

Mr. MCSLARROW. Our analog customers? Correct. 

The CHAIRMAN. Your analog customers are sitting out there in 

rural Louisiana, or an island in Hawaii or somewhere in Alaska, 

but they’re on a cable system, but those sets will pick over-the-air 

broadcasting if they dial it in right, right? 

Mr. MCSLARROW. If they have a digital-to-analog converter box 

with it, yes. 

The CHAIRMAN. Yes. But these signals are going to be digital 

now. 

Mr. MCSLARROW. Correct. 

The CHAIRMAN. But those sets are still analog. And you want us 

to maintain them in analog for a period of time, until you get ready 

to convert them. I don’t understand that. 

Mr. MCSLARROW. No, Mr. Chairman. I’m sorry, I haven’t been 

clear. No, we’re all for the transition to digital. What we’re saying 

is, when it comes down to the point where we have to distribute 

a signal to an analog customer, we need to be able to give them 

an analog signal. Digital signals will go to digital customers. So 

we’re not—— 

The CHAIRMAN. But your signals are going out in digital to your 

cable clients that have them, aren’t they? 

Mr. MCSLARROW. And we can do both. 

The CHAIRMAN. Well, why don’t you want to do both—do mustcarry? 

Mr. MCSLARROW. We don’t want to do both in every single circumstance for every single operator for every single station. That’s 

when you get into real capacity crunches. But we would love to be 

able to carry as much as we can. And we will. 

The CHAIRMAN. I promised we’d be finished by noon. One last 

question. 

How many analog customers do you expect to have on your system in 2009, if we make that the hard date? How many sets will 

still be on cable systems that are analog, and will remain analog 

until something changes? 

Mr. MCSLARROW. We currently have—I think our estimate’s 134 

million analog TV sets in cable customer households, and 40 million of those households are just analog, period. I don’t know what 

our estimates are for 2009. I don’t think it will be too much different. We have 26 million digital subscribers now. We’re adding, 

you know, probably a million a year. But you’re still going to probably have roughly 50 percent of our customers, by 2009, who will 

still receive analog—— 

71 

The CHAIRMAN. And unless we do something about it, these foreign producers of our TVs—and I don’t know of any that are produced at home—will continue bringing into the United States sets 

that look like they’re digital, but they’re not digital-ready. Unless 

we do something, all the televisions that come in from now on will 

still be analog until we mandate it, isn’t that right? 

Mr. MCSLARROW. Well, you can buy—I mean, you can buy them 

today. 

The CHAIRMAN. But they’re not all—— 

Mr. MCSLARROW. I think—— 

The CHAIRMAN.—they could bring in digital sets starting in October if we told them that’s all they could bring in. 

Mr. MCSLARROW. Well, they sell digital sets now, Mr. Chairman. 

And I think the key is notice, notice to consumers. 

The CHAIRMAN. How much longer do you think we should allow 

the sale of analog sets in the United States? 

Senator BURNS. To follow up on that, if the Senator would yield, 

what if we mandated a chip in every television—new television set 

to be sold today, that it could receive analog or digital already built 

into the set? What would happen? 

Mr. KNORR. I think—— 

The CHAIRMAN. The price would go up. 

Mr. KNORR. Yes, I think that would be a question for the electronics—but I assume that price might go up, but I think that the 

sooner the digital chips are in the TV sets, the sooner that accelerates the transition. I mean, as a cable operator, I have no problem 

with the government wanting to buy converter boxes for all my 

analog customers. You know, I don’t have any objection to that. But 

I think we can make that not necessary. As several people have 

outlined, the natural transition process, from the time the signals 

are available, which has really only been the past couple of years, 

is a 10-, to 15-, to even 20-year process. And what we’re saying is, 

as cable operators, we can facilitate that natural process by, at the 

same time, getting spectrum released sooner, without forcing customers to accelerate that natural transition process. 

The CHAIRMAN. Thank you all very much. 

We’re going to convene this afternoon at 2:30. And at the beginning of that meeting, we will have the demonstration of the improved signal concept. 

Thank you. 

[Whereupon, at 11:55 a.m., the hearing was recessed.] 

(73) 

THE DIGITAL TELEVISION TRANSITION— 

AFTERNOON SESSION 

TUESDAY, JULY 12, 2005 

U.S. SENATE, 

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Committee met, pursuant to notice, at 2:30 p.m. in room 

SR–253, Russell Senate Office Building, Hon. Ted Stevens, 

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. TED STEVENS, 

U.S. SENATOR FROM ALASKA 

The CHAIRMAN. The second session of this DTV hearing will 

focus on the use of analog spectrum by public-safety and high-tech 

groups. It will also consider consumer education about the DTV 

transition. And, last, we’ll examine how a subsidy program for settop boxes should be designed, and what it would cost. 

We have six witnesses. But before we start, I want to begin with 

a demonstration of the set-top boxes, which Mike Kennedy, from 

Motorola, has agreed to demonstrate for us. 

Now, Mike, you might want to wait, though, for some of the 

other, sort of—we call them, tardy, OK? 

[Laughter.] 

[Senators appear.] 

The CHAIRMAN. We do believe we’re going to have a full—not almost—an almost full bench. I’d prefer it to wait, if that’s all right 

with you. You’re going to be here for a while, anyway. Can we put 

that off? 

Mr. KENNEDY. That’s fine. Absolutely fine. 

The CHAIRMAN. And then, after it’s over, for the audience’s information, Mr. Kennedy has agreed to turn this thing around and let 

you all see the same thing. We couldn’t set it up on both sides at 

the same time. 

So, why don’t we start, then, with the concept of the hearing? Let 

me first call upon Mike Kennedy, Senior Vice President of Motorola. What we’re going to do—do you all have any opening statements here this afternoon? 

Well, we’ll just go across the panel, as we did this morning, and 

then have questions from each Senator, when they come in. But 

we’ll pause, when we get a sufficient number, to have Mr. Kennedy’s presentation of this. 

Mike? 

74 

STATEMENT OF MICHAEL D. KENNEDY, SENIOR VICE 

PRESIDENT, AMERICAS COUNTRY MANAGEMENT; 

DIRECTOR, GLOBAL GOVERNMENT RELATIONS, MOTOROLA 

Mr. KENNEDY. Good afternoon, Chairman Stevens, and members 

of the Committee. 

My name’s Mike Kennedy, and I have responsibility for Country 

Management for North and South America, as well as Government 

Relations, for Motorola, worldwide. It’s an honor to be here with 

you today. 

As you know, Motorola is the original high-tech startup company, 

with over 75 years of technology heritage. We developed the first 

cell phone, and have a 65-year history of providing ever-advancing 

communications systems for public safety. Today, Motorola is a 

leading provider of solutions for cellular, wired, and wireless 

broadband, first responders, and cable communications. 

I want to thank you, Mr. Chairman, for scheduling this hearing, 

and I appreciate the opportunity to appear before you today to discuss the promise of completing the DTV transition for America’s 

consumers and first responders. 

Before I discuss the importance of the spectrum for public safety, 

I would like to talk briefly about the benefits that will arise from 

portions of the 700 megahertz spectrum that are to be used for 

commercial services. The characteristics of this spectrum provide a 

unique opportunity for the development of new wireless broadband 

service providers, particularly in rural areas. The favorable propagation characteristics of the 700 megahertz band means that 

broadband services could be initially deployed with only one-quarter of the infrastructure that would be necessary in other spectrum 

allocations commonly used for WiFi-type services. 

Affordable wireless broadband will provide enormous benefits to 

the American public, including providing access to information and 

services such as telemedicine, so that doctors can remotely treat 

patients, assist in delicate medical procedures, and transmit large 

medical files; telework, allowing work from home or other locations, 

thereby reducing travel time, increasing efficiency, and providing 

people in remote areas greater opportunities for employment; and 

distance learning, providing greater opportunities for America’s 

youth to get a quality education. These are just a few of the examples of the almost limitless applications and opportunities provided 

by affordable broadband. 

In addition, we can improve the quality of mission-critical information to our front-line responders. For example, an officer or an 

agent could transmit video of a potential biological weapon and get 

real-time counsel from a remote expert. Police could instantly send 

or receive a photograph of an abducted child. Firefighters could access building blueprints, hydrant locations, and hazardous-material 

data. Unfortunately, these benefits for our safety and security 

await Congressional action on DTV. 

As you explore ways to complete the DTV transition, we encourage you to continue your examination of the provision of converter 

boxes to analog TV consumers who do not subscribe to cable or satellite TV services. To make the transition a success, consumer education, the converter box, and a hard date will combine for a painfree end to antique analog TV services. 

75 

Motorola estimates the price to a consumer for a digital-to-analog 

converter box that would facilitate the transition on January 1, 

2009, to be $50. Anybody—this is an example—in fact, this is a 

working converter box here that I will demonstrate at your pleasure a little later—anybody can make this box. It’s a one-time marketplace. And we would encourage you to examine it. As you look 

to craft policy to provide converters for Americans who watch TV 

over-the-air with analog sets, we think the affordable price of this 

box can really help. 

Mr. Chairman, at that point, what I would like to do is hold the 

rest of my remarks. And I’ll be happy to offer the demonstration 

when you want me to. 

[The prepared statement of Mr. Kennedy follows:] 

PREPARED STATEMENT OF MICHAEL D. KENNEDY, SENIOR VICE PRESIDENT, AMERICAS

COUNTRY MANAGER; DIRECTOR, GLOBAL GOVERNMENT RELATIONS, MOTOROLA

Good morning, Chairman Stevens, Co-Chairman Inouye, and members of the 

Committee. 

My name is Mike Kennedy, and I am the Americas Country Manager for Motorola 

and head of Global Government Relations for the company. We have served state, 

and local public safety and Federal law enforcement and their technology needs for 

more than 65 years. We also created the walkie-talkie for the warriors of WWII, the 

pager, the satellite phone, the cell phone, and now we are working to obsolete the 

cell phone with mobile devices that will be more like universal remote controls for 

life. 

I want to express my appreciation to you, Mr. Chairman, for scheduling this hearing to address the need to provide timely and specific access to much-needed spectrum in the 700 MHz band to America’s first responders and for other wireless 

broadband purposes. You and Senator Inouye have been great champions for the 

public safety community and the need to end the digital television transition with 

a fixed date. 

As you know, the report of the National Commission on Terrorist Attacks Upon 

the United States (hereinafter the ‘‘Report’’) highlighted the critical need of the public safety community to have access to additional spectrum for its mission-critical 

communications needs. 

It is an honor to be here with you today to discuss how we can implement one 

of the recommendations of the Report that remains un-legislated, and provide for 

a safer America by ensuring that first responders have the resources needed for lifesaving communications. The horrible events last week in London further amplify 

the need to provide our emergency responders with the tools necessary to respond 

as quickly and effectively as possible. 

Ending the digital television transition, as you know, also frees up spectrum for 

advanced commercial services. These services will enable greater connectivity for 

rural areas, greater competition in the provision of broadband, and new mobile applications to link people with technology’s promise no matter where they may be: 

in the home, at work, in the car, or out and about going about living their lives. 

Motorola’s Technology Heritage 

Motorola is a leading provider of communications and information solutions, including public safety, private, commercial wireless, cable, and wireline communications. We have more than six decades of experience in meeting the mission-critical 

needs of our public safety customers. We offer an extensive portfolio of solutions specifically designed to meet the rapidly evolving safety and security needs of these 

customers. Our solutions include interoperable mission-critical radio systems based 

on the P25 public safety interoperability standard; command and control solutions; 

identification and tracking solutions; information management for criminal justice 

and civil needs; and physical security and monitoring solutions. 

In 2002, our public safety business in Motorola received the Malcolm Baldrige National Quality Award, the Nation’s premier award for performance excellence and 

quality achievement. We continually strive to translate the quality processes upon 

which this award was based into high quality and reliable communications systems 

for our public safety customers. Motorola works very closely with our customers to 

help them implement communications capabilities needed for both every day mission critical needs and catastrophic events. 

76 

Motorola invented the cell phone in 1973. Today we are leader in multi-mode, 

multi-band communications products and technologies and are transforming the device formerly known as the cell phone into a universal remote control for life. We 

are advancing seamless mobility with innovative technology solutions and delivering 

proven capabilities in cellular, wireless broadband and wireline access technologies, 

with recognized leadership in integrating core networks through wireless IP, wireless softswitch and IP multimedia subsystems. As the largest cable set-top box provider, we are providing scalable, integrated end-to-end systems for the delivery of 

broadband services that keep consumers informed, entertained, and connected. 

As a company, Motorola has also been a leader in developing and providing technology for the broadcast and cable industries. In 1947, we built one of the first affordable TV sets, which was offered to consumers for under $200. In 1957, the company built the technology for the first pay-per-view cable event. In 1963, as TV upgraded from black and white to color, Motorola developed the first truly rectangular 

picture tube for color television in a joint venture with the National Video Corporation. The tube quickly became the standard for the industry. In 1972, we developed 

the first remote-controlled set-top box, and in 1992, Motorola helped launch the digital revolution by proposing to the government a concept that no one else had seriously considered—transitioning from analog to digital technology to drive the market to high-definition TV (HDTV) and facilitate the recovery of spectrum. 

Recommendations of the 9/11 Commission Report 

The Report by the 9/11 Commission extensively reviewed how emergency responders communicated or, in too many cases, were unable to communicate, during the 

tragic events of September 11, 2001. The Report notes that there was substantial 

inability to communicate on the needed level of interoperability at the World Trade 

Center, the Pentagon, and in Somerset County, Pennsylvania. 

While it is clear that prior coordination, advanced preparation, and training by 

responding agencies greatly enhanced communications among emergency personnel 

when it was done, all too often this prior planning, coordination, and training did 

not occur, and the ability of multiple agencies to work together to maximize their 

life-saving efforts was frustrated. 

Planning and coordination can only go so far, however, to provide effective communications in an emergency. Absent proper equipment and resources communications capabilities can quickly become overwhelmed, greatly diminishing their effectiveness. Proper resources not only include radios that can interoperate among 

agencies using a common standard, but also spectrum to ensure the availability of 

sufficient system capacity. The 9/11 Commission recognized this fact and recommended that Congress legislate the expedited and increased assignment of radio 

spectrum for public safety. 

Motorola, the Nation’s major law enforcement and fire fighting organizations, as 

well as the associations representing America’s cities, counties, and mayors fully 

support this recommendation. The spectrum referred to in the report is in the 700 

MHz band. Public safety identified the need for this spectrum 8 years ago in a September 11, 1996 report by the Public Safety Wireless Advisory Committee. That report, rather eerily, indicated that the 24 MHz under consideration today should be 

available within 5 years. As we all know, 5 years later the horrific terrorist attacks 

on our soil gave rise to the 9/11 Commission, which again, urged that these frequencies be made available to public safety. In the absence of these frequencies 

being available to public safety for their critical communications needs, the Nation 

unfortunately is needlessly less equipped than it should be—in an area we know 

how to fix—to protect the American people. After the first report was published, 

Congress acted quickly, to allocate this spectrum to public safety in 1997. Unfortunately, since then, public safety’s ability to use this spectrum has been greatly hampered or stopped in the areas where it is most needed—the major urban centers. 

The reason is the continued use of the spectrum for analog broadcast television services absent a date-certain as to when the spectrum will be fully transferred to public 

safety’s use. The communication needs of public safety are too important to allow 

this uncertainty to continue. 

Swift action by this Congress can provide public safety access to one of the fundamental building blocks of an effective communications system—spectrum. Congress’ 

commitment made in the Intel Reform bill, passed in December, to pass legislation 

this year to end the DTV transition was excellent, and we urge you not to be deterred. 

Current law sets December 31, 2006, as the date for clearing television from the 

band. However, this is not a firm date. Broadcasters do not have to clear the band 

until 85 percent of the households in their service areas have the capability to receive digital TV signals, an environment unlikely to be met by year-end 2006. 

77 

1Letter dated June 7, 2005 from Mr. Gary Shapiro, CEO of the Consumer Electronics Association, to Congressmen Barton, Dingell, Upton, and Markey, citing 13.2 million over-the-air households and 38.3 million over-the-air televisions nationwide at the present. 

Under current law, while TV incumbents are required to vacate this spectrum at 

the end of 2006, they can receive an unlimited extension of this deadline based on 

the state of the transition in their particular market. So, in reality, there is no ‘‘hard 

date’’ when the transition will end and the spectrum will really be accessible to public safety and wireless broadband service providers everywhere. This is not the optimal situation for the public safety or high tech communities and those they serve. 

We commend and encourage efforts by this Committee to act on the recommendation of the 9/11 Commission that legislation be enacted that would clear this spectrum nationwide for public safety as close to year-end 2006 as possible. We also applaud Senators McCain and Lieberman for their dedicated efforts to help advance 

this need with their SAVE LIVES Act. We eagerly look forward to the direction that 

you, Mr. Chairman, will take and offer our support, in advance, to you on this vitally important initiative. 

Converters Can Enable a Date-Certain for the Transition, Increase 

Channels, and Provide a Clearer Picture for Consumers With Analog 

TVs 

While clearing the 700 MHz spectrum for public safety will affect a small number 

of viewers relative to the improved security gains for many, Motorola believes there 

are options for mitigating the over-the-air impact while affording the invaluable 

benefits of completing the full transition to digital television. Completing the transition to digital television will have numerous benefits, including spectrum for advanced public safety and consumer services, enhanced and expanded viewing options for the public, more efficient use of the spectrum, and the likelihood that digital stations will provide a wide variety of data and other services to the public. 

The Congress could realize the gains of the transition as early as possible by setting a hard date for the transition, and ensuring that viewers continue to have access to free over-the-air television by providing inexpensive digital-to-analog overthe-air converter boxes to those that need them. A similar approach was used in 

Berlin, Germany, to ensure a seamless and pain-free crisp analog-to-digital TV transition. This was achieved through the provision of converter boxes to some TV consumers who did not subscribe to cable or satellite TV service and maintained an 

analog TV set. We believe this is a positive step that could provide a real path forward on how to solve the transition here in the U.S. The Berlin Model worked. To 

make it a success, consumer education, a converter box subsidy, and a hard transition date combined for a real win. This type of approach can allow this Congress 

to reach a solution that addresses the needs of all stakeholders. The status quo cannot be allowed to stand. A simple technology solution that you can enable will guide 

the public and industry through the transition, and fulfill the Committee’s years old 

vision of making available the advanced services in the 700 MHz band that will benefit the American people. 

Motorola is a TV set-top box provider. In comments to the FCC almost one year 

ago, we stated that—assuming that the market is driven by a hard deadline of December 31, 2006, for the end of the DTV transition—we estimated that the cost of 

a digital-to-analog over-the-air converter box would be approximately $67 per unit. 

That estimate was based on the best possible foreseeable technology and implementation information available at that time. Today, we are pleased to be able to say 

that our estimate was a conservative one. Suppliers are making changes that provide better integration of the converter components, and prices are moving down. 

We would now expect that a $67 dollar price would be achievable earlier than originally expected, and believe that this downward trend will continue. We expect that 

by January 1, 2009, converters would be available for approximately $50 assuming 

that a hard deadline for the end of the digital transition is set. 

The implications of this $50 figure are profound. Such a price per unit would peg 

the cost of providing one digital-to-analog converter box for every exclusively overthe-air household, based on studies by the Consumer Electronics Association,1 at 

around $660 million. Asking consumers to contribute $20 toward the box would reduce the government cost to around $400 million, and also help minimize fraud. 

While the population will grow, these over-the-air TV numbers will continue to decline dramatically by January 1, 2009. As CEA testifies today, in 2005, approximately 12 percent of the Nation’s households rely on over-the-air TV, and at the end 

of 2008, they project the number to drop to 6.8 percent, or about 60 percent of what 

it is today. Applying this trend to the above figures, a $50 converter box provided 

to every exclusively over-the-air household would cost the government approximately 

78 

$400 million without a consumer contribution, and $250 million with a $20 contribution. 

The cost to provide converters to those who need them is much less than the anticipated spectrum auction proceeds for the commercial digital wireless broadband 

licenses that would occupy the reclaimed analog TV spectrum. 

Upon conclusion of the transition, viewers who receive their television programming through cable or satellite will not have to make any changes to continue using 

their existing analog television sets. The relatively small percentage of viewers who 

receive their television programming directly from over-the-air broadcasts will be 

able to continue using their existing television sets, although a digital-to-analog converter will be needed to do so. 

The converter receives the digital signal and converts it to an analog signal that 

analog TVs recognize. They are easy to install and use. The converter is connected 

between the antenna and television using standard cables and connections. The connections are compatible with even the oldest television sets. 

There are a number of advantages to receiving digital signals even while viewing 

an analog television. Digital TV signals are less prone to interference and generally 

provide a clearer picture than analog signals. The converted digital signals are free 

from the ‘‘ghosts’’ and ‘‘snow’’ experienced with off-air analog signals. This provides 

an improved viewing experience and a significantly better picture over fair quality 

analog transmissions. Going digital also gives broadcasters the opportunity to provide over-the-air viewers with more channels and viewing options. With digital, 

broadcasters can send multiple channels of programming in the same space that one 

analog channel occupies. The digital-to-analog converter recognizes all of these 

channels and displays them independently on existing analog televisions. Many 

broadcasters are already taking advantage of this opportunity to provide viewers 

with more programming and information by providing multiple channels of over-theair content, including additional programming or local news and weather information. 

Setting a firm transition date is critical to resolve the current chicken and egg 

conundrum of the DTV transition. As you know, doing so will not only provide critically needed spectrum for public safety, but will also unlock new entertainment and 

information services for consumers, and will provide additional opportunities for 

American industry. Wireless communications provide our first responders with the 

right information, at the right time and in the right place, whether that information 

is voice, data, or video. 

Public Safety Needs 700 MHz Spectrum for Critical Technologies 

Motorola’s partnership with the public safety community over the years has 

taught us that first responders need systems designed specifically for mission critical operations to get the job done. For example, as with most of the Northeast and 

Midwest, the State of Michigan was confronted with a large-scale emergency during 

the August 2003 blackout. Despite the failures experienced by various commercial 

carrier networks in Michigan, and surrounding states, due to these power outages, 

Michigan’s nearly 12,000 public safety radios experienced no interruptions in communications. Police officers, firefighters, and EMS providers worked as a team in 

real-time to serve the public. Michigan had control over its communications because 

it had created a statewide mission critical network designed specifically for catastrophic situations and events, including the disruption of normal power sources. 

While many public safety entities also use public carrier networks for less critical 

communications, there is no substitute for mission critical systems when the safety 

of first responders, and the public they serve is at risk. 

Effective mission critical mobile and portable communications systems are absolutely essential to public safety operations. Police officers, firefighters, emergency 

medical personnel, and their departments use mobile and portable communications 

to exchange information that can help protect public safety officials and the citizens 

they serve. Traditionally, this information was mostly exchanged by voice. Increasingly, as public safety entities strive to increase efficiency and effectiveness in today’s world, they also need the capability to reliably transmit and receive high performance data, still images, and video. Spectrum is the road upon which such communications travel, and increased communications requirements lead to the need for 

more spectrum. 

Based on a thorough justification of need, Congress and the Federal Communications Commission dedicated 24 MHz of spectrum in the 700 MHz band to state and 

local public safety in 1997. The FCC established specific nationwide interoperability 

channels within this spectrum allocation, as well as both narrowband and 

broadband channels to support a variety of identified public safety communications 

requirements. 

79 

However, 8 years later, incumbent television stations operating on channels 62, 

63, 64, 65, 67, 68, and 69 prevent public safety access to this essential resource in 

most major urban areas where the demand for more spectrum is the greatest. The 

recent focus on increased interoperability and Homeland Security make availability 

of this public safety spectrum nationwide even more critical. 

These channels are critical to public safety for two reasons: 

(1) Together, the new 700 MHz and current 800 MHz bands provide the best 

opportunity to integrate interoperable communications. The 700 MHz band’s 

proximity to the 800 MHz band allows public safety agencies to expand their 

current 800 MHz narrowband voice and data systems for interoperability and 

regional coordination on an ‘‘intra’’ as well as ‘‘inter’’ agency basis. Equipment 

operating in these combined frequency bands on the FCC-endorsed Project 25 

interoperability standard is commercially available today. The FCC has granted 

each state a license to operate such narrowband communications in the 700 

MHz band. Localities throughout the country are actively engaged in spectrum 

planning at 700 MHz, a prerequisite for obtaining their own FCC licenses. For 

example, after a year-long review by the FCC, the Southern California regional 

plan was approved, but TV incumbency prevents actual use of the spectrum in 

much of that area. 

(2) 700 MHz is the only dedicated spectrum allocation where public safety can 

implement advanced mobile wide area systems that bring high-speed access to 

databases, the intranet, imaging, and video to first responders out in the field. 

This technology offers a whole new level of mobile communications capabilities, 

which is far beyond today’s voice and low-speed data applications. For example: 

a. An officer or agent could transmit video of a potential bomb, or biological 

weapon and get real-time counsel from an expert in another location. 

b. Local or State police could instantly send or receive a photograph of a missing or abducted child. 

c. Crime scene investigators can transmit live video of footprints, fingerprints, 

and evidence to speed analysis and apprehension of perpetrators. 

d. Firefighters can access building blueprints, hydrant locations hazardous material data, and other critical information. 

e. Paramedics can transmit live video of the patient to doctors at the hospital 

that would help save lives. 

Motorola previously conducted wideband trials together with public safety entities 

in Pinellas County, Florida and the City of Chicago. We are also proud to be part 

of the broadband demonstration that is being led by the Office of the Chief Technology Officer for the District of Columbia Government (OCTO). That system provides coverage throughout most of the District, and is providing valuable information to law enforcement agents. We are proud to be working with the OCTO on an 

innovative solution that will deliver powerful applications to the front-line first responders here in our Nation’s Capitol. All of these trials operate under experimental 

700 MHz licenses from the FCC. The capabilities demonstrated are the emerging 

powerful multi-media applications that will bring public safety communications into 

the Twenty-First Century. 

As you know, the 24 MHz of spectrum in the 700 MHz band is allocated for state 

and local public safety use. Congress, in the Intelligence Reform and Terrorism Prevention Act of 2004 (Public Law 108–458), signed into law in December, directed the 

Federal Communications Commission, along with the Department of Homeland Defense and the National Telecommunications and Information Administration, to conduct an assessment of public safety spectrum needs to determine whether this allocation is sufficient to meet the communications needs of public safety. This effort 

is ongoing, and is especially important as we see the demand for information, exemplified by trials like the one here in the District, grow for access to full broadband 

services for public safety. 

In addition, while this allocation will be available for state and local law enforcement, no comparable spectrum allocation exists for meeting the Homeland Security 

requirements of Federal agencies or critical infrastructure entities. Such interoperability among state and local first responders, Federal agencies and critical infrastructure entities will best be achieved through the availability of comparable spectrum resources. These issues must be carefully considered in order to provide a comprehensive and long-term solution that meets America’s security needs. 

Once cleared, the original 24 MHz of spectrum allocated to Public Safety in 1997, 

will support narrowband and wideband applications for State and Local government 

agencies. Narrowband 12.5 kHz channels provide the capacity for voice and text-like 

80 

data. This will help promote interoperability as public safety entities necessarily expand their capabilities. Notably, narrowband radios which support both 700 and 800 

MHz in one radio are already available. As users purchase additional radios for 

their 800 MHz systems, they will have the capability to use the 700 MHz band once 

it is cleared. Wideband spectrum at 700 MHz supports applications such as imagerich records access and higher speed video streaming over wide areas. 

The Public Safety community, the FCC and multiple equipment manufacturers 

have already spent considerable time and resources to develop the operational and 

technical rules for that 24 MHz of spectrum. In addition, both narrowband and 

wideband interoperability standards have been developed and are supported by multiple competitive manufacturers. For example, the TIA902 SAM standard for wideband public safety operations at 700 MHz has been developed and unanimously 

adopted by the public safety community and multiple competitive manufacturers. 

Subsequently, the TIA 902 wideband standard was endorsed by the Public Safety 

community and specifically recommended for FCC adoption. 

700 MHz Spectrum Holds the Promise of Economic Benefits and Growth 

In addition to the 24 MHz of spectrum allocated to public safety in the 700 MHz 

band, there is 84 MHz of spectrum allocated for commercial uses. Of this, 24 MHz 

has already been licensed, although use is severely limited due to continued use of 

the spectrum by TV broadcasters. Of the 108 megahertz to be reclaimed, 60 megahertz remain to be licensed. This spectrum holds tremendous promise as a home for 

another generation of advanced wireless broadband services that that will provide 

American citizens with greater access to information, and provide immense economic benefits from greater productivity. 

The societal benefits of providing access to broadband services can not be questioned. Broadband access enables powerful applications. For example: 

• Telemedicine so that doctors can remotely treat patients that are too frail or 

injured to travel to an expert medical facility, to remotely assist in a delicate 

medical procedure, or to transmit large medical files or information for evaluation at an expert specialized facility. 

• Telework, which allows workers to work from home or other locations outside 

of the regular company office. This reduces travel time to work, can increase 

efficiency and provide people in remote areas greater opportunities for employment. 

• Digital government so that leaders can provide citizens greater access to government services through e-government initiatives. 

• Advanced farming to improve and increase the efficiency of monitoring and controlling of agricultural resources, increasing crop and livestock yields by alerting 

farmers to problem areas, and providing farmers access to the information necessary to take corrective action. These technologies can reduce the costs associated with distribution of farm products, and can increase the safety of food supply by enabling better tracking of products through the production and distribution network. 

• Distance learning so that all Americans have access to the best possible education on an equal footing. 

• Increased access to services and opportunities for persons with disabilities will 

strengthen their participation in the information economy. 

These are just a few examples of the almost limitless applications and opportunities provided by broadband. 

While the benefits of broadband are clear, America’s commitment to widespread 

cost-effective deployment of broadband is not. The United States has steadily 

slipped down the broadband deployment slope compared to the rest of the world, 

and now ranks 16th in broadband subscribers as a percentage of the population. 

The spectrum that will be made available at 700 MHz as a result of the transition 

to digital television provides a unique opportunity to provide facilities-based competitive broadband services. The favorable propagation characteristics of the 700 

MHz band will allow broadband services to be initially deployed with approximately 

25 percent of the infrastructure that would be necessary in the 2.4 GHz band, which 

is commonly used for WiFi today, considerably reducing the costs of deployment. 

These propagation characteristics also allow for easier penetration through and 

around potential obstacles to deploying wireless services in higher frequency bands. 

The characteristics of this spectrum make it ideal for both mobile and fixed services. 

Exclusive licenses for use of these frequencies will allow operators to provide the 

highest quality service in terms of reliability, and will provide incentives for efficient 

81 

2 Analysis of an Accelerated Digital Television Transition, Colman Bazelon, Analysis Group, 

May 27, 2005. 3See, TIA standard TIA–1030 http://www.3gpp2.org/Publiclhtml/specs/C.S0057-0 

v1.0l020904.pdf and 3GPP TS 45.005 (http://www.3gpp.org/ftp/Specs/archive/45lseries/ 

45.005/45005-710.zip). 

use. Such an opportunity could significantly advance efforts to provide broadband 

services to all Americans. 

The economic benefits of this spectrum are enormous. Estimates of the auction revenues from this spectrum range from $10 billion toward $30 billion. This pales 

in comparison, however, to the economic benefits to society. When considering such 

implications as increased productivity for the Nation, and lower costs of services to 

consumers due to making this spectrum available for better uses than merely analog TV, the economic benefit to America was recently estimated at $233 billion to 

$473 billion dollars in a report by the Analysis Group.2

Significant steps have already been taken that will provide for rapid commercial 

use of this spectrum when it is fully available. Standards bodies, including the 3rd 

Generation Global Partnerships and the Telecommunications Industry Association 

have already adopted standards for use of technology in this spectrum.3 Standardized technology will lower the cost of equipment and provide for rapid acceptance 

of equipment and services. In addition, companies that have licenses in this spectrum band have begun to deploy systems in the limited areas not encumbered by 

broadcast stations. For example, Qualcomm has developed its MediaFLOTM system 

to provide voice and data multimedia to mobile devices. Such innovative technologies hold the promise of providing consumers with access to exciting new levels 

of information and entertainment. 

In closing, Mr. Chairman, and members of the Committee, we urge you not to be 

deterred from sticking as close as possible to the original December 31, 2006 goal. 

Making this spectrum available for new innovative technologies to support first responders and consumers nationwide anytime near the end of 2006, will not happen 

without you. The Report of the 9/11 Commission has reaffirmed the need for this 

spectrum and added new impetus to making it available to our Nation’s First Responders. We urge you to take swift action this year to make this important longawaited objective a reality for law enforcement, fire fighters, emergency medics, and 

your constituents. As we have just seen, our allies in London were attacked by terrorists. All of the experts tell us that it is not a matter of if, but when, will they 

strike us here again. Communications tools are vital in these emergencies. We know 

this and we know how to make them available—it starts with ending the DTV transition. 

Motorola stands ready to support this Committee to help minimize the impact on 

the viewing public of making 700 MHz spectrum available, and to put this spectrum 

to its highest and best use—protecting American citizens. We respectfully urge the 

Congress to take action to implement the recommendation of the 9/11 Commission 

to make the 700 MHz spectrum fully available to public safety by a date certain 

as soon as possible. 

Thank you. 

The CHAIRMAN. Well, thank you for your courtesy. 

Our next witness is Harlin McEwen, International Association of 

Chiefs of Police, Communication, Technology Committee. He’s 

chairman of that committee. 

Mr. McEwen? 

STATEMENT OF HARLIN R. MCEWEN, CHAIRMAN, 

COMMUNICATIONS & TECHNOLOGY COMMITTEE, 

INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE 

(IACP); COMMUNICATIONS ADVISOR, MAJOR CITIES CHIEFS 

ASSOCIATION (MCC), NATIONAL SHERIFFS’ ASSOCIATION 

(NSA), MAJOR COUNTY SHERIFFS’ ASSOCIATION (MCSA) 

Mr. MCEWEN. Thank you, Mr. Chairman, and members of the 

Committee, for an opportunity to appear before you today. 

My name is Harlin McEwen, and I am a retired Police Chief of 

the City of Ithaca, New York. And I’m also retired as the Deputy 

Assistant Director of the Federal Bureau of Investigation here in 

82 

Washington, D.C. I serve as the Chairman of the Communications 

and Technology Committee of the International Association of 

Chiefs of Police, a position I’ve held for more than 27 years. I also 

serve as the Communications Advisor for the Major City Chiefs Association, the National Sheriffs Association, and the Major County 

Sheriffs Association. 

In addition to these organizations, today I’m also speaking on behalf of the Association of Public Safety Communications Officials 

International, better known as APCO, the Police Executive Research Forum, the International Association of Fire Chiefs, the 

Congressional Fire Services Institute, National Association of State 

EMS Directors, the National Association of Counties, and the National League of Cities. 

Citizens rely upon their local and state police agencies, sheriffs 

offices, fire departments, emergency medical services, and other 

public-safety agencies to come to their assistance wherever and 

whenever needed, whether it is a crime in progress, a civil disturbance, a building fire, a forest fire, an automobile accident, a health 

emergency, a natural disaster, or, as we learned on 9/11, a terrorist 

attack. Citizens assume that those first responders will get the call, 

and will have the communications tools they need to address emergencies quickly and efficiently. 

Radio spectrum is critical for public-safety agencies to maintain 

the communications capability they need to protect the safety of 

life and property. However, in 1996, a blue-ribbon committee determined that public-safety agencies did not have sufficient radio 

spectrum to do their jobs. 

Congress responded in 1997, by directing the FCC to reallocate 

24 megahertz of spectrum in the 700 megahertz band for publicsafety services. Unfortunately, the 700 megahertz band public-safety spectrum continues to be blocked by television stations on Channels 63, 64, 68, and 69, and, to some degree, on adjacent Channels 

62, 65, and 67, especially in the major metropolitan areas. Under 

current law, these stations are permitted to stay in the band until 

December 31, 2006, or when 85 percent of the households in their 

market areas have the ability to receive DTV signals, whichever is 

later. 

In the meantime, the public-safety spectrum needs identified in 

1996 have worsened, especially since 9/11, as police, sheriffs, fire, 

and EMS, and other public-safety agencies are being asked to assume greater roles in protecting homeland security. A current example is last week’s tragic bombings in London, and the heightened security now placed on our Nation’s public transportation systems. 

Anytime there is a terrorist attack against the U.S., or in any 

other part of the world, public safety must have even more effective 

and interoperable radio communications capability. Therefore, the 

public-safety community supports legislative efforts that call for an 

early and firm date by which broadcasters must clear the channels 

occupied in the 700 megahertz band. 

The 700 megahertz band is critical for public-safety agencies to 

alleviate dangerous congestion on many existing radio systems, 

which places first responders and the public at risk. The spectrum 

also will facilitate new and expanded multi-agency communications 

83 

systems to promote interoperability among first responders in the 

field. 

Finally, additional spectrum will allow for deployment of new 

public-safety communications technologies. However, until the Congress establishes a date certain for TV broadcasters to vacate the 

700 megahertz band, most public-safety agencies, and state and 

local governments cannot begin significant planning and funding 

for new radio systems on that spectrum. The 9/11 Commission specifically recommended that Congress support legislation providing 

for the expedited and increased assignment of radio spectrum for 

public-safety purposes. In response to this recommendation, the Intelligence Reform and Terrorism Prevention Act of 2004, included 

a sense of the Congress that this issue must be addressed in the 

First Session of the 109th Congress. 

In addition to our urgent need for the 24 megahertz of spectrum 

previously allocated by Congress for public safety, the tragic terrorist acts of September 11, 2001, and advances in technology have 

intensified the need for further allocations to provide for publicsafety-area wireless broadband data networks. 

In order to aid this effort, the Intelligence Reform Act required 

the Department of Homeland Security and the Federal Communications Commission to analyze this spectrum requirement and 

report back to Congress later this year. Therefore, we support language in S. 1268, the SAVE LIVES Act, that would permit Congress to designate additional public-safety spectrum in the 700 

megahertz band following completion of those studies. 

In closing, I would again stress that the public-safety community 

supports legislative efforts that call for an early and firm date by 

which broadcasters must clear these channels occupied in the 700 

megahertz band. 

Thank you very much. 

[The prepared statement of Mr. McEwen follows:] 

PREPARED STATEMENT OF HARLIN R. MCEWEN, CHAIRMAN, COMMUNICATIONS & 

TECHNOLOGY COMMITTEE, INTERNATIONAL ASSOCIATION OF CHIEFS OF POLICE

(IACP); COMMUNICATIONS ADVISOR, MAJOR CITIES CHIEFS ASSOCIATION (MCC), 

NATIONAL SHERIFFS’ ASSOCIATION (NSA), MAJOR COUNTY SHERIFFS’ ASSOCIATION

(MCSA) 

Thank you, Mr. Chairman, and members of the Committee for the opportunity to 

appear before you today. 

My name is Harlin McEwen and I am the retired Police Chief of the City of 

Ithaca, New York, and I am also retired as a Deputy Assistant Director of the Federal Bureau of Investigation in Washington, D.C. I serve as the Chairman of the 

Communications and Technology Committee of the International Association of 

Chiefs of Police (IACP), a position I have held for more than 27 years. I also serve 

as the Communications Advisor for the Major Cities Chiefs Association (MCC), the 

National Sheriffs’ Association (NSA), and the Major County Sheriffs’ Association. In 

addition, today I am speaking also on behalf of the Association of Public Safety 

Communications Officials—International (APCO), the Police Executive Research 

Forum (PERF), the International Association of Fire Chiefs (IAFC), the Congressional Fire Services Institute (CFSI), the National Association of State EMS Directors (NASEMSD), the National Association of Counties (NACo), and the National 

League of Cities (NLC). 

Citizens rely upon their local and state police agencies, sheriffs’ offices, fire departments, emergency medical services, and other public safety agencies to come to 

their assistance wherever and whenever needed, whether it is crime in progress, a 

civil disturbance, a building fire, a forest fire, an automobile accident, a health 

emergency, a natural disaster, or, as we learned on 9/11, a terrorist attack. Citizens 

84 

1 As I and others have often noted, the date of the PSWAC report was September 11, 1996. 

Exactly 5 years later, on September 11, 2001, the spectrum identified by PSWAC was still not 

available for public safety use in most of the Nation. 

assume that those first responders will get the call, and will have the communications tools they need to address emergencies quickly and efficiently. 

Radio spectrum is critical for public safety agencies to maintain the communications capability they need to protect the safety of life and property. However, in 

1996, a blue ribbon committee (the Public Safety Wireless Advisory Committee or 

‘‘PSWAC’’) determined that public safety agencies did not have sufficient radio spectrum to do their jobs. Among PSWAC’s recommendations was that 25 MHz of spectrum be made available from TV channels 60–69 (the 700 MHz band) within 5 

years.1 Congress responded in 1997, by directing the FCC to reallocate 24 MHz of 

spectrum in the 700 MHz band for public safety services. 

Unfortunately, the 700 MHz band public safety spectrum continues to be blocked 

by television stations on channels 63, 64, 68, and 69 (and, to some degree, adjacent 

channels 62, 65, and 67), especially in major metropolitan areas. Under current law, 

these stations are permitted to stay in the band until December 31, 2006, or when 

85 percent of the households in their market areas have the ability to receive DTV 

signals, whichever is later. 

In the meantime, the public safety spectrum needs identified in 1996 have worsened, especially since 9/11, as police, sheriffs, fire, EMS, and other public safety 

agencies are being asked to assume greater roles in protecting homeland security. 

A current example is last week’s tragic bombings in London, and the heightened security now placed on our Nation’s public transportation systems. Any time there is 

a terrorist attack against the U.S. or in any other part of the world, public safety 

must have even more effective and interoperable radio communications capability. 

Therefore, the public safety community supports legislative efforts that call for an 

early and firm date by which broadcasters must clear the channels occupied in the 

700 MHz band. 

The 700 MHz band spectrum is critical for public safety agencies to alleviate dangerous congestion on many existing radio systems, which places first responders and 

the public at risk. In much of the nation, there are no longer any frequencies available for new or expanded public safety radio systems. As a result, too many first 

responders are crowded on common channels, blocking critical communications, both 

on a day-to-day basis and, especially, when major emergencies occur. Once cleared 

of TV stations, the 700 MHz band channels will facilitate expansion of public safety 

systems already operating in the adjacent 800 MHz band, and the construction of 

many new public safety radio systems across the Nation. 

A key benefit of the 700 MHz band spectrum is that it will allow for new and 

expanded multi-agency communications systems to promote interoperability among 

first responders in the field. While there are many causes and solutions to the interoperability problem, in many cases the most effective long-term solution is to consolidate agencies on the same radio system, or at least on systems in compatible 

frequency bands. Some states and counties have built such multi-agency systems 

(often in the now-crowded 800 MHz band), and many others would do so if sufficient 

radio spectrum were available. Clearing the 700 MHz spectrum would also allow 

many existing 800 MHz systems to expand their capacity to accommodate additional 

public safety agencies. The FCC rules for the 700 MHz band also ensure that all 

radios operating within the 700 MHz band will include designated interoperability 

channels and a common digital interoperability standard (Project 25). 

Additional spectrum will also allow for deployment of new public safety communications technologies, such as mobile data networks that will provide first responders with access to critical information in the field. Today, agencies seeking to implement new data networks are often stymied by the lack of sufficient radio spectrum. 

The public safety benefits of the 700 MHz band are very real. However, until Congress establishes a date certain for TV broadcasters to vacate the 700 MHz band, 

most public safety agencies and state/local governments cannot begin significant 

planning and funding for new radio systems in that spectrum. 

The 9/11 Commission specifically recommended that Congress support legislation 

providing ‘‘for the expedited and increased assignment of radio spectrum for public 

safety purposes.’’ In response to this recommendation, the Intelligence Reform and 

Terrorism Prevention Act of 2004, included a Sense of Congress that this issue must 

be addressed in the First Session of the 109th Congress. 

In addition to our urgent need for the 24 MHz of spectrum previously allocated 

by Congress for public safety, the tragic terrorist acts of September 11, 2001, and 

advances in technology have intensified the need for further allocations to provide 

for public safety wide-area wireless broadband data networks. The National IntelVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00088 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
85 

ligence Reform Act of 2004, requires the Department of Homeland Security (DHS) 

and the Federal Communications Commission (FCC) to analyze this spectrum requirement and report back to Congress later this year. Therefore, we support language in S. 1268 (The SAVE LIVES Act) that would permit Congress to designate 

additional public safety spectrum in the 700 MHz band following completion of those 

studies. 

In closing I would again stress that the public safety community supports legislative efforts that call for an early and firm date by which broadcasters must clear 

the channels occupied in the 700 MHz band. 

The CHAIRMAN. Thank you. 

The next witness is Charles Townsend, who is the Chairman— 

I guess you’re CEO of Aloha Partners. 

STATEMENT OF CHARLES C. TOWNSEND, PRESIDENT/CEO, 

ALOHA PARTNERS, LP 

Mr. TOWNSEND. Thank you. 

Good afternoon, Chairman Stevens, Co-Chairman Inouye, and 

members of the Committee. 

My name is Charlie Townsend, and I’m President and Founder 

of Aloha Partners. I’ve been in the telecommunications industry for 

the past 25 years, and I have founded two cellular telephone companies, and been President of one cable TV company. 

About 5 years ago, I concluded that wireless broadband business 

had the potential to be as successful as the cellular telephone business is today; however, the key to that success will be the spectrum 

that is used to deliver the service. 

I believe that 700 megahertz is the optimum spectrum to deliver 

wireless broadband. As a result, I founded Aloha Partners in 2001, 

and was the largest buyer of licenses in the original 700 megahertz 

auction. Aloha has invested over $100 million in 700 megahertz licenses. It is now the largest 700 megahertz licensee, holding licenses that cover over 175 million people, roughly 60 percent of the 

United States. 

Aloha has been actively evaluating potential uses for 700 megahertz spectrum for the past 3 years, and is planning on launching 

several market trials in the next 12 months. Aloha has also been 

approached by a number of Fortune 500 companies about potential 

joint ventures and uses of the spectrum. 

As a result, Aloha is in a unique position to provide the Committee with information regarding potential uses of the 700 megahertz spectrum, who is likely to bid for the remaining licenses in 

the 700 megahertz auction, and what the benefits of the DTV transition are likely to be. 

The DTV transition offers five major benefits for U.S. households. I will focus on two of them today: 

The first is broadband. The United States is lagging behind other 

developed countries in broadband penetration. This is primarily 

due to two factors—the lack of availability of broadband in rural 

regions of the United States, and the lack of broadband competition 

in urban markets. 

Last year, the Pew Charitable Trust conducted an extensive 

study of broadband in rural and urban markets. The study showed 

that 25 percent of all American homes only have access to one or 

no broadband providers. The study also showed that nearly one in 

three rural homes do not have access to any form of broadband. 

86 

Seven hundred megahertz frequencies have the potential to solve 

both of these problems, because 700 megahertz is the most cost-effective frequency available to provide wireless broadband service. 

In addition to broadband, Aloha believes a number of Fortune 

500 companies plan to use 700 megahertz for new wireless services. 

These companies fall into two groups: the companies planning to 

use 700 megahertz for WiMAX broadband technology and companies planning to use 700 megahertz for mobile TV. Aloha believes 

that the companies that will participate in the 700 megahertz auction include major cable companies, such as Comcast, Cox, and 

Time Warner. These companies recognize that they need a wireless 

product to bundle with their telephone and video offerings. Major 

ISPs like AOL, AT&T, and Covad recognize that they can no longer 

rely on the Bell operating companies to deliver their broadband 

product, and they will need 700 megahertz spectrum to bridge the 

last mile. 

Aloha believes that a second group of bidders is interested in offering mobile TV and mobile music. Most major entertainment 

companies are likely to recognize that mobile TV and music services will be the next major growth industry in the entertainment 

business. As a result, potential bidders may include companies like 

Sony, Disney, and Time Warner that will want to control the technology and method of distribution for this market. 

However, it is important to appreciate that all of these companies recognize that time-to-market is critical for their success. At 

present, it appears that the remaining 60 megahertz of 700 megahertz spectrum will not be available for another 3 years. Any further delay in getting to market is likely to influence their willingness to participate in the auction, or pay significant sums for the 

spectrum. 

In conclusion, Aloha has been fortunate to purchase a large block 

of 700 megahertz and be exposed to many opportunities to use 700 

megahertz, for wireless broadband, and mobile TV and music services. Aloha is prepared to bid on additional 700 megahertz licenses 

as soon as they are available. Aloha urges this Senate Commerce 

Committee to accelerate the DTV transition so that these additional services may be available. 

Thank you. 

[The prepared statement of Mr. Townsend follows:] 

PREPARED STATEMENT OF CHARLES C. TOWNSEND, PRESIDENT, ALOHA PARTNERS, LP 

My name is Charlie Townsend, and I am the President and Founder of Aloha 

Partners. I have been in the telecommunications industry for the past 25 years, and 

have been President of three cellular companies and one cable TV company. I founded, expanded and eventually sold two of the three cellular companies. About 5 years 

ago, I concluded that the wireless broadband business had the potential to be as 

successful as the cellular telephone business is today. However, the key to that success will be the spectrum that is used to deliver the service. I believe that 700 MHz 

is the optimum spectrum to deliver wireless broadband. As a result, I founded Aloha 

Partners in 2001, and was the largest buyer of licenses in the original 700 MHz auction. 

Aloha’s Perspective 

Aloha has invested over $100 million in 700 MHz licenses. It is now the largest 

700 MHz licensee, holding licenses that cover over 175 million people, roughly 60 

percent of the United States population. 

87 

Aloha has been actively evaluating potential uses for 700 MHz spectrum for the 

past 3 years, and is planning on launching several market trials in the next twelve 

months. Aloha also has been approached by a number of Fortune 500 companies 

about potential joint ventures and uses of its spectrum. 

As a result, Aloha is in a unique position to provide this Committee with information regarding potential uses of 700 MHz spectrum; who is likely to bid for the remaining licenses in the 700 MHz auction; and what the benefits of the DTV Transition are likely to be. 

The DTV Transition offers five major benefits for U.S. households: 

(1) Better Television Picture Quality 

(2) More Broadband Competition 

(3) New Wireless Services 

(4) Better Emergency Communications 

(5) Value to the U.S. Economy 

Better Television Picture Quality 

Nearly 10 years ago, the Senate passed the original DTV legislation. You envisioned that consumers would receive better picture quality and more channels. That 

vision is as true today as it was a decade ago. Digital TV will significantly improve 

television pictures for everyone... not just for those who have digital TV sets. 

Digital TV signals are less affected by interference than analog signals and usually 

provide clearer pictures than traditional analog reception. Digital signals eliminate 

the ghosting and snow that many over-the-air households currently experience. 

Most people have focused on the benefits that people with new digital sets and high 

definition sets will receive. These newer television sets are primarily in cable and 

satellite homes. Little attention has been focused on the significant improvement 

that will be seen on analog sets in over-the-air homes. I would like to focus on the 

benefits that people with analog over-the-air sets will receive. Last week, I personally visited Motorola’s office here in Washington, and was able to see a demonstration of their latest digital set-top box. This allowed me to compare what a DTV signal looks like when you use a converter for your analog over-the-air television. Motorola showed side-by-side comparisons of the current over-the-air analog picture 

and the new over-the-air digital picture when seen on an analog set. I am glad to 

report that I did not need an electrical engineering degree to tell the difference. 

While I am not a technical expert on television picture quality, I would say there 

was a significant improvement in the digital signal viewed on the analog set, probably a 25–50 percent improvement. Not only was the picture quality more vivid and 

bright with the digital Over-The-Air picture, but the snow and picture fade that I 

could see on the analog television set was absent from the digital picture. My conclusion was that if you can give everyone access to those new digital signals, you 

are going to have a lot of very happy Over-The-Air television viewers out there. 

More Broadband Competition 

Broadband has the potential to be one of this country’s key economic engines for 

the next 10 years. Unfortunately, the United States is falling behind countries like 

China, Japan, Korea, and even Iceland, with respect to broadband. This is due in 

considerable part to two factors: the lack of availability of broadband in rural regions of the U.S., and the lack of broadband competition in urban markets. Last 

year, the Pew Charitable Trust conducted an extensive study of broadband in rural 

and urban areas. That study showed that 25 percent of all American homes only 

have access to one or no broadband providers. The study also showed that nearly 

one in three rural homes do not have access to any form of broadband. 700 MHz 

frequencies have the potential to solve both of these problems; because 700 MHz is 

the most cost-effective frequency available to provide wireless broadband. 

Studies have consistently shown that 700 MHz can provide broadband service in 

rural areas at half to one third the cost of the 1900 MHz personal communications 

services frequencies used by the cellular carriers (see Attachment). 700 MHz can 

provide broadband services in rural areas at one fourth to one sixth the cost of the 

2400 MHz WiFi and MMDS (now BRS) frequencies used by unlicensed owners and 

by companies such as Sprint and Nextel. 700 MHz has the advantage of traveling 

further and being able to penetrate walls, dense foliage, and other obstructions 

without the deterioration of signal experienced with either 1900 MHz or 2400 MHz 

wireless transmissions. These features make 700 MHz the ideal frequency for providing wireless broadband in both rural and urban markets. Not only can 700 MHz 

be used to provide high-speed Internet access, but it can also offer low-cost VoIP 

service for voice customers. What this means is that rural areas that were previously ‘‘unreachable’’ can now get broadband service on an affordable basis. 

88 

The Digital Divide Can Be Closed 

America has always been a land of opportunity. However, the advancements in 

Internet access have not made those opportunities available to everyone. Late last 

year, the NTIA announced results of an additional study of broadband in rural and 

urban areas. The NTIA findings were very similar to those in the Pew Internet 

study. NTIA concluded, however, that differences in broadband penetration are due 

not to lack of interest in broadband, but rather to lack of broadband availability in 

rural areas. Almost one out of four homes in rural areas have no access to 

broadband service, compared to urban areas where 95 percent of homes can get at 

least one broadband provider. The NTIA concluded that wireless technologies using 

frequencies like 700 MHz ‘‘are better suited at present than cable or DSL for providing high-speed Internet access in areas whose population density is low.’’ In essence, broadband has created two groups of households: the haves and the havenots. The 700 MHz spectrum can close that gap. 

The Rural Paradox 

Some broadcasters have portrayed rural areas as having the most to lose in the 

DTV transition. Paradoxically, rural areas are likely to lose the least and gain the 

most from the DTV transition. Compared to urban areas, rural areas will likely face 

fewer transition issues because cable and satellite service penetration rates already 

are high, and rising, in rural areas. At the same time, broadband availability is low 

and unlikely to rise unless 700 MHz spectrum is freed-up for this purpose. 

For example, Montana has an estimated 86 percent of its homes covered by satellite and cable. That leaves about 50,000 of the households that are receiving TV 

Over-The-Air and potentially in need of assistance to complete the transition. On 

the other hand, more than 175,000 households are estimated to be unable to receive 

broadband because they live in low-density areas. In other words, the number of 

households in Montana that are being deprived of broadband is over three times as 

large as the number of households that may be affected by the DTV transition. Montana is not an isolated case. A number of states represented on this committee face 

the same situation: Arkansas, Louisiana, Maine, Mississippi, Nebraska, North Dakota, South Carolina, Virginia, and West Virginia. The beauty of the DTV transition 

is that these states will be the biggest beneficiaries of the transition; because the 

DTV transition not only will solve their broadband problem, but also will deliver 

better TV reception to Over-The-Air households in the process. 

Aloha Introductory Markets 

Aloha plans to conduct several trial markets to demonstrate the 700 MHz benefits 

for wireless broadband. Later this year, Aloha will launch a trial in Tucson, Arizona, 

to demonstrate the 700 MHz coverage advantages in both rural and urban areas. 

In the first half of 2006, Aloha will launch a trial in a top 20 market to demonstrate 

how public safety groups and commercial broadband can be combined on the same 

network and integrated together. 

New Wireless Services 

Based on discussions Aloha has had with a number of Fortune 500 companies, 

Aloha expects the 700 MHZ auction to be highly competitive. Aloha believes that 

these companies plan to use 700 MHz for a number of new wireless services. The 

potential bidders probably will fall into two groups: (1) companies planning to use 

700 MHz for WiMax broadband technology and (2) companies planning to use 700 

MHz for Mobile TV. 

Aloha believes that the companies that may participate in the 700 MHz auction 

include major cable companies like Comcast, Cox, and Time Warner. These companies recognize that they need a wireless product to bundle with their telephone and 

video offerings. Major ISPs like AOL, AT&T, and Covad recognize that they can no 

longer rely on the Bell operating companies to deliver their broadband product and 

that they will need 700 MHz spectrum to bridge the last mile. Large satellite companies like EchoStar and DIRECTV and wireless operators like T-Mobile, Alltel, and 

Clearwire also will be interested in using 700 MHz WiMax to compete in both the 

data and VoIP markets. 

Aloha believes that the second group of bidders is interested in offering Mobile 

TV and Mobile Music. Qualcomm already owns some 700 MHz spectrum and has 

announced an $800 million commitment to roll out Mobile TV and Music services 

nationwide. Crown Castle also owns spectrum and plans to roll out Mobile TV and 

Music services in major markets next year. Major entertainment companies are likely to recognize that mobile TV and music services will be the next major growth 

opportunity in the media entertainment business. As a result, potential bidders may 

89 

include companies like Sony, Disney, and Time Warner that will want to control the 

technology and method of distribution for this new market. 

However, it is important to appreciate that all of these companies recognize that 

‘‘time-to-market’’ is critical for their success. At present, it appears that the remaining 60 MHz of 700 MHz spectrum will not be available for another 3 years. Any 

further delay in getting to market is likely to influence their willingness to participate in the auction or pay significant sums for the spectrum. 

Better Emergency Communications 

Many people have discussed the value that 700 MHz can bring public safety 

through voice communications and low-speed data. However, there are also some 

significant benefits that can come from 700 MHz high-speed Internet access as well. 

Police can compare on-line finger prints and watch videos real-time to monitor 

emergency situations. Fire Departments can view schematics of buildings and hazardous material locations while at the scene of a fire. And EMTs can transmit EKGs 

and send videos of injuries from the location of the emergency. 

Value to U.S. Economy Is Significant 

Aloha has estimated in previous filings with the House Commerce Committee that 

the remaining 700 MHz spectrum could generate between $20 to $30 billion for the 

U.S. Treasury if an auction were held in the near future. Since that filing, a number 

of noted economists have indicated that the benefits to the U.S. economy should not 

be viewed solely in terms of one-time auction revenues, but also in terms of broader 

economic potential. Coleman Bazelon, noted economist and Vice President of the 

Analysis Group, has estimated that the 700 MHz spectrum could generate up to 

$475 billion in benefits to the U.S. economy. 

The Sooner the 700 MHz Auction the Better 

There has been some discussion that delaying the 700 MHz auction may be beneficial. However, it is unclear to me who will benefit from any further delays. The 

sooner the spectrum is auctioned: 

1. The sooner millions of U.S. television viewers will see significantly improved 

pictures. 

2. The sooner there will be additional broadband competition in urban and rural 

markets. 

3. The sooner new wireless services will be available throughout the country. 

4. The sooner emergency communications will be improved. 

5. The sooner the U.S. economy will generate up to $475 billion in economic 

benefits. 

Conclusions 

Aloha has been fortunate to purchase a large block of 700 MHz, and be exposed 

to many opportunities to use 700 MHz for Wireless Broadband and Mobile TV and 

Music services. Aloha is prepared to bid on additional 700 MHz licenses as soon as 

they are available. The United States economy, TV households, rural communities, 

and first responders will all be direct beneficiaries of the auction of 700 MHz spectrum. Aloha urges the Senate Commerce Committee to accelerate the DTV transition so that these benefits will be realized sooner rather than later. 

90 

The CHAIRMAN. Thank you very much. 

The next witness is Mr. Gene Kimmelman, Senior Director of 

Public Policy and Advocacy at the Consumers Union. 


town.eps
91 

STATEMENT OF GENE KIMMELMAN, SENIOR DIRECTOR OF 

PUBLIC POLICY AND ADVOCACY, CONSUMERS UNION; ON 

BEHALF OF CONSUMERS UNION AND CONSUMER 

FEDERATION OF AMERICA 

Mr. KIMMELMAN. Thank you, Mr. Chairman, Co-Chairman 

Inouye, members of the Committee. On behalf of Consumers Union, 

the print and online publisher of Consumer Reports, we appreciate 

the opportunity to testify today. We totally concur with the notion 

that it is time for more spectrum to be made available for public 

safety, and endorse your desires to free up the analog spectrum 

that broadcasters have been using. But I want to spend a few minutes with you walking through, in practical terms, what it means 

for consumers. 

You heard the back and forth between the cable and broadcast 

industry earlier today as to how the market could or should work. 

This is a funny market for consumers. As the Committee well 

knows, this is one of those markets where more players come in, 

there’s more technology than ever before, and prices keep going up 

and up, and it doesn’t quite seem to work the way competition is 

supposed to. 

So, what happens here with people’s TVs? Well, by our surveying 

we find that there still are at least 15 percent of American consuming households that just rely on over-the-air television. I think 

most surveys show similar numbers. More than 16 million households get their television service over-the-air. When you cutoff the 

analog signal, those television sets will not work. 

But that’s not the whole story. In asking consumers who get 

cable and satellite whether they also have television sets that are 

not hooked up to those services, we find that there are as many as 

45 million additional sets that consumers say are not used for 

DVDs, are not used to play games, that are used to receive overthe-air signals, in addition to their cable and satellite hookups. 

Those analog sets will also go black after this transition. And we 

find, as you well know, most consumers don’t just have one television set; on average, they have at least two. 

So, what’s the issue for consumers? Well, these are all folks who 

went out and bought a television, where the retailers told them, 

manufacturers told them, ‘‘It will work. It’ll receive over-the-air signals.’’ They have a full expectation that every dollar they spent on 

those sets would get them over-the-air signals. 

If you transition, give back analog spectrum for a very worthy 

cause, for public safety and for more competition, those people are 

left in the dark without a converter box, like Mr. Kennedy is showing you. Who pays? 

Well, there obviously are concerns here for low-income consumers, people of limited resources. There are concerns in rural 

areas, where television service may be more important than anywhere else. And we believe those people ought to be held harmless. 

But think about it for a minute. Why should anyone—anyone, regardless of income—have to pay just to keep their television set 

working, particularly in an area where we’re talking about freeing 

up spectrum to auction off, as Mr. Townsend indicates, to many 

highly well-financed commercial entities that want to enter the 

market, provide new services, and that will be bringing in revenue 

92 

for the Federal Treasury? Why not use those proceeds, the first dollars available from those auctions, to ensure that consumers are 

not worse off as a result of this transition? Let’s make sure that 

people’s TV sets keep working. And let’s also make sure that what 

we get out of this truly is a benefit to the public. 

Mr. Townsend indicates a wonderful new development, more 

competition in the broadband area—we welcome that, but we also 

note that, in the other part of this marketplace, we’ve had enormous consolidation. SBC buying AT&T, Verizon buying MCI. We 

see very few options, as Mr. Townsend pointed out, for broadband 

service, and a great need, particularly for rural and lower-income 

people. Wireless broadband offers a possibility of prices as much as 

50 percent lower than many of the offerings we’re seeing in the 

marketplace today, from cable modem service, from the Bell companies with their DSL services. It’s critical that, if you move to free 

up this spectrum and put it out to auction, that we not allow the 

largest companies that currently dominate the market to dominate 

it even further. 

And, finally, with all this spectrum available and the important 

needs of broadband, we urge you to consider really creating an 

open space, some unlicensed area where new players can come in 

using new technologies—WiFi mesh networks—to bring us more 

choices, more competition. The competition you heard about this 

morning between broadcasters and cable is a funny kind of competition. It’s over numbers of channels on the system, it’s over ad 

revenue. 

Senator Ensign, you pointed out that consumers ought to be able 

to pick the winners and losers. I’m totally with you on that. Consumers all want that. The problem is, cable companies decide what 

channels go on their systems. Consumers don’t decide what channels go on. Broadcasters decide what cable channels they’re going 

to bundle with their broadcast channels and pressure cable companies to either take them or leave them. Broadcasters offer a wonderful local service, but do you realize that half of all broadcasters 

in this country don’t even do local news? Do not even produce local 

news? There are a lot of problems in what cable and broadcast are 

offering. I leave it to you to pick the winners and losers there. 

What’s important for consumers is to have—to win by having more 

choices in the marketplace. 

So, we urge you, as you go through this transition and bring back 

spectrum, please hold consumers harmless, and please devise rules 

so that we end up with more players, more competition, and, hopefully, more broadband available so that consumers get better services at lower prices. 

Thank you. 

[The prepared statement of Mr. Kimmelman follows:] 

93 

1 Consumers Union is a nonprofit membership organization chartered in 1936, under the laws 

of the State of New York to provide consumers with information, education and counsel about 

goods, services, health and personal finances, and to initiate and cooperate with individual and 

group efforts to maintain and enhance the quality of life for consumers. Consumers Union’s income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on Consumers Union’s own 

product testing, Consumer Reports with more than 5 million paid circulation, regularly, carries 

articles on health, product safety, marketplace economics and legislative, judicial and regulatory 

actions which affect consumer welfare. Consumers Union’s publications carry no advertising and 

receive no commercial support. 2The Consumer Federation of America is the Nation’s largest consumer advocacy group, composed of over 280 state and local affiliates representing consumer, senior citizen, low-income, 

labor, farm, public power, and cooperative organizations, with more than 50 million individual 

members. 

PREPARED STATEMENT OF GENE KIMMELMAN, SENIOR DIRECTOR OF PUBLIC POLICY

AND ADVOCACY, CONSUMERS UNION; ON BEHALF OF CONSUMERS UNION AND

CONSUMER FEDERATION OF AMERICA

Consumers Union 1 and Consumer Federation of America 2 appreciate the opportunity to testify on the transition from analog to digital television. The digital transition, as envisioned by the 1996 Telecommunications Act, has failed, requiring additional Congressional action. That legislation will determine whether the transition 

to digital television will ultimately benefit American consumers with more programming and telecommunications choices, or whether it will impose billions in direct 

costs on consumers and exacerbate concentration in telecommunications markets. 

To ensure the outcome is the former not the latter, any legislation that this Committee takes up on the digital transition must: 

• Ensure that consumers do not bear the direct costs of the transition, which are 

estimated to be $3.5 billion or more, or suffer from the loss of television signals 

they rightfully expect to receive; 

• Promote market competition, rather than consolidation, through appropriate allocation of the 108 MHz of returned spectrum to new entrants and smaller existing market players, particularly in the area of broadband wireless; 

• Promote unlicensed, or open-market, use of spectrum by both commercial and 

noncommercial entities of a portion of either the reclaimed or digital spectrum 

to promote competition, foster advanced communications services, and bridge 

the digital divide by promoting universal, affordable access to broadband Internet; and 

• Prevent further concentration of local media markets by addressing ownership 

restrictions for dominant local broadcast outlets in the post-transition, digital 

environment. 

We look forward to working with members of the Committee to ensure that any 

legislation on the digital television transition incorporates these core consumer provisions. We elaborate on these critical needs below. 

Hold Consumers Harmless 

Consumers buy televisions with the reasonable expectation that they will be able 

to receive free over-the-air television broadcasts over the life of their televisions. 

And that life can be substantial. Research from Consumer Reports shows that televisions are the workhorses of consumer electronics: they last for decades. Even 

today, as Congress focuses on a hard digital television transition date, millions of 

consumers are buying new analog sets on the assumption they will work for years 

to come. A federally mandated transition to digital turns that assumption on its 

head: for consumers relying on over-the-air broadcasts, their sets will be useless for 

their primary purpose. 

An artificial, government-imposed mandatory transition to broadcasting solely 

using digital signals will create, at a minimum, a monumental inconvenience for 

consumers who will be forced to purchase a costly converter box to ensure their televisions will keep working. And if Congress gets this wrong, the transition will not 

merely inconvenience consumers, which is nuisance enough, it will impose on them 

direct costs of $3.5 billion or more. 

Therefore, any conversion to digital television must ensure that the analog sets 

now in use will continue to function after the transition without imposing additional 

costs on consumers. 

The number of consumers that could be left in the dark by the digital transition 

is substantial. New consumer research conducted by Consumers Union and the ConVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00097 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
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3 Attachment A, Estimating Consumer Costs of a federally Mandated Digital TV Transition. 

June 29, 2005, Consumer Federation of America/Consumers Union. 

sumer Federation of America 3 shows that about four in ten American households, 

or about 42 million households, continue to rely on about 80 million over-the-air 

televisions (OTA-only sets) for some or all of their television viewing. Given very low 

sales of digital-ready televisions in recent years, virtually all of these sets are likely 

to be capable of receiving only analog signals. 

Of the 42 million households with OTA-only sets, about 16 million rely solely on about 35 million over-the-air televisions to watch television programming. The remaining 26 million households with OTA-only sets are those that subscribe to cable 

and satellite services, but also rely on up to an additional 45 million OTA-only 

sets—those not connected to the subscription service but used for over-the-air broadcast program viewing. These are sets that are used, for example, in the kids’ rooms, 

the kitchen, the home office, and so forth. For cable/satellite households, our estimates explicitly excluded unconnected sets that were NOT used at all for broadcast 

viewing. 

We present these estimates not as exact numbers of households and analog sets 

directly affected by the transition, but rather as an indicator of what the ‘‘real’’ 

numbers are likely to be. There has been substantial confusion over the number of 

over-the-air reliant households to which Congress will need to provide compensation 

for the costs of converter boxes required to keep their otherwise fully functional TV 

sets working. At the high-end were estimates by the National Association of Broadcasters and the Government Accountability Office that found 73 million over-the-air 

sets in use. At the low-end were estimates by the Consumer Electronics Association 

that found only 33 million such sets. Based on our research, we believe the latter 

estimate dramatically understates the number of over-the-air reliant sets, and that 

the NAB/GAO estimates are more likely in-line with reality. Even after adjusting 

the NAB estimates by different assumptions, such as the number of sets per households, 65 million represents the lower bound estimate of the number of OTA sets 

in American households. 

As Congress considers whether and how much to compensate consumers for the 

costs imposed on them by the government-mandated transition, CU and CFA believe it should allocate proceeds from the auction of reclaimed spectrum to a compensation program in an amount which reflects the number of OTA-only sets and 

OTA-only households at the highe- end of estimates provided to date. Relying on 

lower estimates could lead Congress to understate the number of households affected, the total costs to consumers and the level of the compensation necessary to 

hold consumers harmless from the Congressionally-mandated transition to digital 

television. 

Based on higher estimates of OTA-only sets and the GAO’s estimate of a cost of $50 per converter box, the federally-imposed, mandatory transition to digital TV 

could impose costs of $3.5 billion or more on consumers just to keep their sets working. 

As shocking as these aggregate numbers are, the costs to individual households 

will likewise by substantial. The digital conversion effectively increases the cost of 

television sets consumers have already purchased. According to the Consumer Electronics Association, a 25-inch television—the most popular set—sells, on average, for 

about $200. A $50 converter box effectively increases the cost of that set by 25 percent. The costs of smaller sets selling for $100 would effectively increase by 50 percent. Given that, according to both our estimates and those of the GAO, the average 

over-the-air household has two televisions, the costs for them are double—effectively 

a consumer tax of $100 or more just to facilitate a transition that benefits broadcasters, equipment makers, retailers, and other industry players. 

While we support proposals that attempt to hold cable and satellite subscribers 

harmless by providing for down-conversion of digital signals, down-conversion does 

not address unconnected analog sets in cable and satellite subscriber-households. As 

noted above, the some 25 million households that fall into this category have reasonable expectations that those sets will continue to work. These households, as well 

as those that rely solely on over-the-air programming, should be compensated for 

the costs of the converter boxes required to keep these sets working. 

We hope Congress agrees that this is an unacceptable cost for consumers to bear, 

regardless of their income, just to be able to view over-the-air broadcasts their sets 

used to receive. 

Therefore, we urge Congress to establish and fully fund a program that will compensate all households that continue to rely on over-the-air sets for the full costs 

of digital-to-analog converter boxes required to keep sets functioning. Even using 

the conservative estimate of spectrum auction revenue of $10 billion that the digital 

95 

transition facilitates, the Committee would be able to both meet its budget reconciliation obligations and fully compensate all households with over-the-air reliant sets 

for the costs of converter boxes. 

This principle is not new to Congress. The Commercial Spectrum Enhancement 

Act (CSEA), enacted in 2003, has been instrumental in encouraging the development of new uses for spectrum. But that law also stipulates that auction proceeds 

must cover 110 percent of the costs of relocation. For DTV transition legislation, the 

Committee therefore should adopt a principle similar to that embodied in the CSEA. 

Consumers have not demanded or driven this transition, which largely benefits others, and they should not be asked to bear its costs. According to the New America 

Foundation, sales of televisions with digital broadcast tuners represented just 4 percent of all televisions sales in 2004, suggesting consumer demand for digitally 

broadcast television is quite small. Indeed, the transition largely benefits other parties: the broadcasters who requested the transition in the first place; the electronics 

manufacturing industry which will sell millions of converter boxes and expensive 

digital televisions; and the dominant telecommunications providers that seek licenses for the additional spectrum freed by the transition. 

The digital transition may, if managed appropriately, provide significant public 

benefits. But, unquestionably, it will be viewed as an abject failure by consumers 

if they are forced to bear the costs of acquiring digital-to-analog converter boxes, or 

face the equally unpalatable alternative of losing access to over-the-air television. 

Promote Market Competition With Licensed and Open-Market Spectrum 

Congress has the unique and important opportunity during this transition to ensure that reclaimed spectrum will be used to facilitate robust competition in the 

broadband market—providing new opportunities for smaller companies, new market 

entrants, and other wireless providers to access valuable spectrum that will allow 

them to better serve their customers and effectively compete in the marketplace. 

Statistics supplied by the Federal Communications Commission and JPMorgan 

show that the high-speed data marketplace is highly concentrated; in fact, it has 

become a cozy duopoly. Cable providers and telephone companies have each divided 

and conquered their markets, and don’t compete against each other outside of their 

territories. As a result of weak competition, broadband penetration in the U.S. is 

proceeding at a slower rate than many other countries—the U.S. now ranks 16th 

in the world. Without competitive alternatives, broadband Internet access will remain a service available only to consumers in those markets deemed desirable by 

dominant providers—and then only at the high prices these monopoly providers demand. Rural and low income communities are left behind. Spectrum policies adopted 

as part of the digital transition can remedy the problem or exacerbate it. 

A quick glance at the remaining alternatives demonstrates that it is up to Congress, through the spectrum policies it designs in any digital transition legislation, 

to provide new competitive opportunities in broadband: 

• Broadband-Over-Power-Lines (BPL) and community fiber-to-the-home (FTTH): 

BPL is an exciting new technology that delivers broadband over a wire already 

available in nearly every home in the country—electrical wiring. Though its 

rollout has been limited to date, it offers significant potential for the delivery 

of affordable, high-speed Internet. Similarly, FTTH uses fiber initially laid by 

utilities for their own purposes, like meter-reading to deliver broadband services. In some communities, publicly owned utilities are offering high-speed 

Internet through BPL and FTTH. Unfortunately, despite the enormous potential for these technologies to facilitate universal broadband access, more than 

a dozen states have erected roadblocks—or even banned—communities and the 

utilities they own from providing these advanced services. These roadblocks— 

and Federal preemption efforts like those already introduced in the House of 

Representatives—could prevent BPL and FTTH from providing ubiquitous access to broadband Internet. 

• Wireless Broadband (WiFi): WiFi, offered today by many by Wireless Internet 

Service Providers (WISPs) across many of America’s cities and towns, uses a 

limited band of unlicensed, or open-market spectrum that was originally allocated to it because no one else wanted this ‘‘junk band.’’ WiFi is now relied upon 

by millions for their primary broadband connectivity, and millions more for secondary, mobile connectivity. 

Importantly, the costs of providing wireless broadband appear to be significantly lower than wired solutions, keeping costs to consumers affordable. Today, 

consumers enjoy wireless broadband services for as little as $15 per month— 

less than half the cost of most wired broadband services offered by telephone 

or cable companies. Those dominant providers also typically require consumers 

96 

to purchase bundled services—telephone or cable service—in order to receive 

broadband access, or charge much higher rates for unbundled broadband Internet. 

WiFi is already an economic generator for thousands of small and mid-sized 

businesses that provide ‘‘hot spots’’ in places where people gather like coffeeshops, conference centers and airports. But companies, communities and nonprofits are also using WiFi to connect parks, neighborhoods, and even to entire 

cities and towns. NYCWireless, a New York nonprofit, provides affordable wireless service to Bryant Park in Midtown Manhattan. Now it’s working with 

churches and community groups to provide service in Harlem neighborhoods 

and housing developments. Tribal Digital Village is a network of 18 tribal villages east of San Diego. It delivers high-speed Internet service to many community centers in their area, and uses the bandwidth for language preservation 

programs. It is currently developing a web portal that meets local needs. Tribal 

youth even train adults how to use the technology, benefiting everyone. The 

Alaska Marine Highway System, a project of the Department of Transportation 

uses WiFi to connect its ships to their network when they are at sea. 

WiFi offers great promise for providing ubiquitous broadband access across the 

nation. This is particularly important for rural or underserved urban markets, 

where existing cable or DSL providers are not offering service. But equally important, wireless providers can offer an affordable competitive alternative to 

areas that have access only to a single high-priced, monopoly provider. 

But the growth potential of this now $10 billion industry is limited because 

under current licensing schemes, WiFi is limited to the unlicensed 2.4 and 5 

GHz bands—spectrum that does not allow signals to pass easily through obstacles, such as trees or walls. These bands are also extremely crowed; WiFi shares 

this spectrum with hundreds of consumer electronic devices. In order for wireless broadband to become an option for more Americans, providers need access 

to unlicensed low-frequency spectrum below 1 GHz—less crowded spectrum 

with propagation characteristics that allow it to travel though buildings, mountains, and other obstacles. 

It is imperative that the American public is able to better utilize the two incredibly valuable, publicly owned blocks of spectrum, which today are under the nearexclusive control of the broadcasting industry at no-cost to them: the digital band 

below 698 MHz which broadcasters will retain; and the 700 MHz band, which will 

be reclaimed after the transition. 

As part of the digital transition, Congress must ensure that both reclaimed and 

digital spectrum will be used to foster universal access to broadband and foster 

stronger market competition. We offer the following recommendations: 

1. Promote Improved Competition Through Spectrum Auction Policy 

If the merger between Sprint and Nextel is approved, just three companies will 

dominate the wireless industry. The owners of two of those wireless companies— 

Verizon Wireless and Cingular—are near-monopoly telephone companies that also 

dominate local and long-distance calling throughout the United States. Other, smaller wireless companies remain minor players that lack the spectrum needed to compete and match services over the long-term. 

But if rights to the valuable spectrum that will be freed up by the transition are 

available only to the dominant wireless carriers as smaller players are priced out 

of the market, the auctions will only make a badly concentrated market even less 

competitive—undercutting quality-of-service, reducing choices, and inflating prices. 

Without the proper safeguards in place, Congress virtually ensures the auctioning 

of spectrum to dominant providers that already control the bulk of this concentrated 

market and who will be unlikely to offer more affordable wireless Internet services 

that compete with their wired offerings. 

Newly available spectrum could be used for wireless broadband in rural and 

urban communities. Even licensed options could be new alternatives to the incumbents for high-speed Internet access. The Congress should ensure that of the estimated 60 MHz to be returned and offered at auction, adequate spectrum is set aside 

for auction to new market entrants and small existing players. Doing so will put 

pressure on the largest market players to compete, resulting in lower consumer 

prices, higher quality, and expanded choices. 

2. Promote Universal Access to Broadband by Allocating Spectrum for Unlicensed 

Use 

Congress also has a unique opportunity during the transition to use portions of 

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4 Certain parts of the spectrum have been set aside or assigned for public governmental uses, 

like defense, safety and education, and not subject to auction. The original cellular licenses were 

also given to licensees. 

market spectrum expands the ability of ordinary citizens to use and share the public 

airwaves. But the potential to further expand the ability of people to use their airwaves is constrained by relegating unlicensed use to higher-frequency ‘‘junk bands.’’ 

As noted above, the ‘‘junk bands’’ were given this moniker precisely because the 

signals that can be transmitted at these frequencies are limited—they do not pass 

easily through walls or trees like TV signals do. And many other devices—like garage door openers, microwaves, and cordless phones—use the same space. 

If the principle of sharing the spectrum in a non-interfering manner is extended 

to portions of lower frequency spectrum below 1 GHz, the potential to deliver wireless broadband and other communications services at lower costs will expand dramatically. Congress can and should expand the space in which the unlicensed or 

noncommercial use of the airwaves is encouraged and allowed. It can do so in following ways: 

• First, it should set aside a portion of the reclaimed spectrum to be dedicated 

for unlicensed use. A set-aside of 18 to 20 MHz of recovered spectrum on a nationwide basis would open adequate space to promote unlicensed uses. 

• Second, it can set aside a small part of the digital spectrum for unlicensed use 

by allowing non-interfering use of white spaces, or through appropriate assignment of new digital channels. Congress cannot ignore the fact that the digital 

spectrum is the largest part of the spectrum made available to private entities 

not subject to auction.4 With the windfall provided to broadcasters in the 6 MHz 

they will be allowed to retain, broadcasters will be able to provide six or more 

digital channels—far more than ever anticipated when Congress enacted the 

1996 Telecommunications Act—where they previously offered one. 

Fortunately, the digital spectrum can be allocated in a manner that enables 

broadcasters to offer a full slate of digital multicasts while leaving enough room 

for unlicensed wireless Internet services in these low frequency bands; 

These proposals for unlicensed use of the digital bands could be particularly effective in encouraging wireless broadband deployment in rural areas where 

more white space is available and fewer channels are occupied. Under current 

rules and proceedings, the Federal Communications Commission has moved 

only haltingly to expand the non-interfering uses of the spectrum. A clear public 

policy promoting the non-interfering use of spectrum would speed the process 

along, and allow unlicensed sharing of spectrum to advance much more rapidly. 

The unlicensed use of even a small portion of newly available spectrum would provide untold public benefits. Among many, the most notable is the opportunity to 

support expansion of community wireless Internet services, offering perhaps the 

first meaningful opportunity for bridging the digital divide that has confounded policymakers for more than a decade. 

Address Media Ownership 

At a time when concerns about competition, cost, and diversity of programming 

have prompted a revisiting of media ownership rules, the DTV transition could 

worsen the problem in local markets. Congress should not ignore the serious implications digital transmission has on media concentration. 

We have significant concerns about the power provided to local news companies 

that already own and control local newspapers and radio stations being provided 

with the capacity to offer six or more digital channels where they previously offered 

one. 

Though all local broadcasters will receive the same new digital capacity, they cannot all take equal advantage of it. Only a few stations in any market currently 

produce or offer local news. Those that do will gain even more market control in 

a multicast digital environment. 

A Consumers Union/Consumer Federation of America study of station ownership 

between 1975 and 2000, found that the number of television station owners fell from 

540 to 360, and the overall number of stations rose. But the number of TV newsrooms declined during this same period. In fact, only half of all broadcast TV stations provide news. Stations with newsrooms, particularly those affiliated with large 

news conglomerates, will be better able to utilize the additional digital capacity, 

dominating local news carriage, reducing diversity of news and information, and increasing the volume and impact of a single owner’s voice in the news marketplace 

in their community. 

98 

To address this problem, Congress should: 

• prevent broadcasters from holding two television licenses in a community; and 

• prevent television broadcasters from also owning a daily newspaper in the same 

market. 

In 2003, millions of Americans, a bipartisan coalition from the House, a majority 

of the Senate, and leaders from both parties raised concerns about media conglomerates owning two stations in most markets, or three stations in the largest ones. 

Unless Congress acts to prevent it, the digital transition has the very real potential 

to substantially increase the ability of a few broadcast giants to dominate local news 

markets nationwide. 

Serving the Public Interest 

In exchange for the privilege of free and exclusive use of the public airwaves, 

broadcasters must serve the ‘‘public interest, convenience and necessity’’ through the 

fulfillment of public interest obligations, such as the provision of educational, civic, 

political, and other programming. Among many shortcomings of these obligations, 

however, has been the ability of the broadcasters themselves to define what constitutes programming in the public interest. In addition, compliance with overly 

vague obligations is difficult both to verify and enforce. In short, these obligations 

have failed to serve the public. 

The FCC should hold broadcasters accountable for their public interest obligations, both now and after the DTV transition, preferably through quantifiable and 

enforceable requirements. These are worthy goals and they should be met. However, 

given the historical and inevitable shortcomings of these obligations, improvements 

to the public interest obligation in any digital transition legislation will be insufficient to adequately serve the public interest. 

Such provisions are neither an effective nor equivalent substitute for legislative 

requirements allocating spectrum to promote market competition and unlicensed 

use for requirements allocating a portion of retained spectrum for independent local 

news, information, or entertainment programming. Setting aside a portion of the 

airwaves for unlicensed, open use would expand the ability of people to speak with 

electronic voices in a manner the promotes free speech rights more dramatically 

than any single act Congress has taken since exclusive licenses were introduced. 

There is little debate that, to date, the imposition of vague obligations on broadcasters has failed the public interest. In order to meet public needs, Congress must 

address the critical competitive, diversity, and ownership concentration issues we 

have raised in our testimony through the effective, equitable, and appropriate allocation of one of the most valuable publicly owned resources—radio spectrum. If Congress takes these steps, it will provide far more meaningful public benefits than any 

improvement to public interest obligations can offer. 

Summary 

Consumers will not thank Congress for digital television if it also means they 

have Congress to thank for the cost of inconvenience, of paying for converter boxes 

out of their own pockets, or the higher prices of new TVs, computers, or equipment 

to integrate their home entertainment systems. The enormous costs of the digital 

transition should be paid for by the ample proceeds generated by the auction of reclaimed spectrum, and by the many industry players that will profit from this transition. 

Digital television is a positive technology that has the potential to benefit consumers and the public as a whole. But that potential can only be realized through 

the appropriate spectrum policies adopted as part of the transition that promote 

competition and innovation in the telecommunications market that will lower prices, 

improve service, and expand choices for consumers. 

We look forward to working with the Committee in stimulating a rapid transition 

to digital television broadcasting and to craft legislation that will resolve these important issues for both consumers and affected industries. 

The CHAIRMAN. The witness who should have spoken before Mr. 

Kimmelman is Mr. Gary Shapiro, President and CEO of the Consumer Electronics Association. My apology. Could you tell us, before you start, before we turn on the light, what is the Consumer 

Electronics Association? 

99 

STATEMENT OF GARY J. SHAPIRO, PRESIDENT/CEO, 

CONSUMER ELECTRONICS ASSOCIATION (CEA) 

Mr. SHAPIRO. The Consumer Electronics Association is a national 

trade association of some 2,000 technology companies. Many of 

your colleagues have seen us best at the International Consumer 

Electronics Show in Las Vegas, Nevada, the world’s largest technology show—in the world’s best trade-show location, too, I might 

add. 

[Laughter.] 

Mr. SHAPIRO. These are the PC-makers, the digital television, 

cellular telephone—these are the companies that have driven the 

economy, driven technology. We also have retailers as members, as 

well, and these are the companies which are bringing the future. 

The CHAIRMAN. Are these manufacturers? 

Mr. SHAPIRO. Manufacturers, retailers and integrators, distributors. Mostly manufacturers, overwhelmingly. The large and small 

mom-and-pop manufacturers all over the country—— 

The CHAIRMAN. Any TV manufacturers—— 

Mr. SHAPIRO. Almost every TV-maker. To be a member, you must 

be a U.S. company with U.S. presence of some type. You might 

be—a few of them are overseas-headquartered, but they have U.S. 

facilities. But, overwhelmingly, they are U.S.-owned-and-operated 

companies. 

The CHAIRMAN. But do they manufacture here? 

Mr. SHAPIRO. Yes. We have—we employ, in the consumer electronics industry, probably almost two million people indirectly, directly, several hundred thousand. 

The CHAIRMAN. Well, thank you. 

Mr. SHAPIRO. It’s a much larger industry than broadcasting, actually. 

The CHAIRMAN. Thank you. Start the clock. Thank you. My apology. 

Mr. SHAPIRO. Well, thank you very much, Chairman Stevens. 

Thank you, Co-Chairman Inouye and members of the Committee. 

We support, as a trade association, our 2,000 member companies, 

a hard deadline to the end of analog broadcasting. That will bring 

the certainty we will need. It’ll be a win-win situation for all stakeholders. It’ll allow manufacturers and retailers to label analog 

products. And, of course, it will foster innovation. And, as we 

heard, it will strengthen our national security. 

Now, thanks to great products, great content, intense competition, and, quite frankly, falling prices, digital television sales are 

setting records virtually every quarter. If Congress sets a hard 

deadline, we expect to have sold 97 million digital television tuners 

by 2009, and we estimate that, by that date, we’ll have digital television tuners in 86 percent of American homes. 

Of course, the digital television is succeeding, the transition is 

succeeding, because consumers are learning about digital television. We’ve run some award-winning promotional efforts. We’ve 

done lots of things to inform consumers about this great product. 

But we support the consensus on a late-2008 hard cut-off date. And 

with a hard deadline, stations will know what to broadcast, manufacturers and retailers will know what to make and to stock, and 

consumers will know what to buy. The stakes are very high here. 

100 

And, of course, we recognize the concerns that Mr. Kimmelman 

expressed, about disenfranchising consumers. But, indeed, the data 

shows that the number of consumers in the category has been 

somewhat exaggerated. 

If there’s any doubt about this, consider the total lack of outcry 

when it was announced that NFL Monday Night Football will not 

be broadcast free over-the-air; in the future, it will only be cable 

or satellite. No articles were written. No consumer complaints were 

received. Indeed, nearly 87 percent of American TV homes now receive their broadcast programming via cable or satellite. Furthermore, only 37.7 million of the 285 million television sets used in 

the U.S. are used to view over-the-air programming. That’s only 11 

and a half percent of the TV sets are even using an antenna now 

to get over-the-air programming. This means that if analog ceased 

tomorrow, less than 13 percent of the population would not have 

access to a broadcast signal. 

And, in those homes that do have cable or satellite, we’ve asked 

them, we’ve surveyed them. What did we find? Only 14 percent use 

an antenna on their second, third, or fourth television. And, of 

course, as we proceed toward the deadline, cable and satellite penetration will go up, and these numbers will diminish, in terms of the 

impact. 

But what about the people that don’t subscribe to cable or satellite? Our research shows that this population’s decision not to 

subscribe to cable or satellite is not made, generally, for economic 

reasons. These are people for whom television is not a high priority. And three-quarters of these analog-only homes are willing to 

buy a new TV, buy a $50 decoder, or subscribe to cable or satellite. 

Some consumers will be affected by a hard date, and that’s why we 

understand your interest in creating a program to allow consumers 

to have access to low-cost digital-to-analog converters. 

The simple fact is that, while an analog broadcasting cutoff is 

important for our Nation, it will only have a small practical impact 

on the viewing habits of vast majority of Americans. And, for this 

reason, we commend you for your suggestion that analog broadcasting end by January 1, 2009. 

Now, our primary goal, of course, is to make the DTV transition 

as consumer-friendly as possible, and that’s why we support the 

hard cutoff date. But we are concerned about some proposals to accelerate the digital deadlines in a way that will harm consumers 

and create significant disruptions at retail. This would be unfortunate. Actually, government set these dates. The manufacturing and 

retail community relied upon these dates. And now we’re being told 

that perhaps they should be accelerated aggressively for the 13- to 

24-inch category, which is the lower-cost televisions. That would 

have an enormous impact on television reception devices. These are 

VCRs, DVDs, and digital video recorders. And it would dramatically increase—perhaps even double—the price of most affordable 

small-screen TV sets, or force manufacturers to now produce those 

models, rather than be in noncompliance. This would be an impact 

that consumers would see from this DTV transition. They’ll walk 

in their store, and the lowest-priced TV sets have, all of a sudden, 

doubled in cost. 

101 

We urge the Committee to also address the important issue of 

signal degradation if the signal comes in through cable. And we ensure that the digital signal be carried under all circumstances. 

Where cable operators are carrying broadcast signals digitally, they 

should not be allowed to reduce the quality of the signal, or the 

sound quality, or eliminate program-related material. If a broadcaster is actually providing a full HDTV signal in Dolby digital surround-sound, then that is what HDTV owners who subscribe to 

cable should see and hear. 

Of course, we look forward to working with you to bring about 

this glorious DTV transition to a successful and timely conclusion. 

Meanwhile, we’ll continue our unprecedented efforts to educate 

consumers about digital television. And I, personally, pledge our 

CEA support and commitment working with you and other stakeholders, to ensure a speedy and consumer-friendly transition and 

a prompt return of the analog broadcast spectrum. 

Thank you. 

[The prepared statement of Mr. Shapiro follows:] 

PREPARED STATEMENT OF GARY J. SHAPIRO, PRESIDENT/CEO, 

CONSUMER ELECTRONICS ASSOCIATION (CEA) 

Chairman Stevens, Co-Chairman Inouye and members of the Committee: 

Thank you for inviting me to discuss our Nation’s progress in the transition to 

digital television (DTV), and the steps that should be taken to conclude the transition in the most beneficial and understandable manner. 

I represent the Consumer Electronics Association (CEA), the principal U.S. trade 

association of the consumer electronics and information technology industries. CEA’s 

2,000 members include virtually every DTV manufacturer. Our members invented 

DTV, and we are thrilled by its astounding marketplace success. CEA also represents the cutting-edge information technology companies who will use the recovered analog broadcast spectrum to provide all Americans with innovative new wireless products and services. 

CEA strongly supports the enactment of a hard deadline for the end of analog 

broadcasting. A hard deadline will bring certainty to the DTV transition. It will provide a ‘‘win-win’’ scenario for all stakeholders, while fostering innovation and 

strengthening homeland security and public safety. We urge you to include a hard 

analog cutoff date in any DTV legislation this committee considers. 

DTV Sales Continue to Rapidly Increase 

Our most recent sales figures show that the first 4 months of 2005 brought the 

greatest volume of DTV sales ever recorded, with 3 million DTV products accounting 

for $4.7 billion of consumer investment and contribution to the robust U.S. economy. 

This is a remarkable 45 percent increase in unit sales from the same time period 

in 2004. 

More than 17 million DTV products have been sold since the first HDTV sets hit 

the market in the fourth quarter of 1998. Americans already have invested an astonishing $25 billion in DTV products. HDTV is the driver behind these phenomenal 

sales figures, with high-definition displays and receivers representing 85 percent of 

the DTV products sold to date. 

Sales are being driven by the rapid price declines that are typical of our industry. 

DTV prices are 75 percent lower than they were 5 years ago and are still declining 

by approximately 15 percent each year. Today there are numerous DTV options 

under the $700 mark, and even some expected soon for as low as $400. Over the 

next 2 years, our members plan to introduce $60 digital-to-analog converters that 

will allow analog TVs to receive digital TV broadcasts. 

Meanwhile, DTV products have spread from specialty retailers and major consumer electronics chains into warehouse clubs, mass merchants, and now discount 

stores like Wal-Mart and Target. 

When consumers walk into retail stores, they now enjoy an unprecedented variety 

of DTV products to meet their needs and budgets. Buyers can choose from a vast 

array of compelling displays from traditional CRT sets to cutting-edge new technologies like plasma, LCD, DLP, and LCoS. 

102 

Most important to the current debate is the fact that consumers now can choose 

from 200+ ‘‘integrated’’ models that include over-the-air ATSC tuners. 

To put this in perspective, digital television has been adopted twice as quickly as 

color television. While it took color television 10 years to achieve 5 percent penetration from introduction, digital television products are already in 16 million American homes. 

Indeed, overall revenues from digital TV now outpace those from analog TV. Television manufacturing is now a digital industry. 

As impressive as those numbers sound, we are only beginning to move up the 

‘‘hockey stick curve’’ of sales, especially with respect to integrated DTV sets 

equipped with digital over-the-air (ATSC) tuners. CEA forecasts that 9 million integrated DTVs will be sold this year, 16.7 million in 2006, 27 million in 2007, and 

33 million in 2008. 

Including set-top boxes, by 2009, we will have sold 97 million DTV tuners, and 

we estimate that over-the-air tuners will be found in 86 percent of American homes. 

At the same time, sales of analog sets are declining precipitously. We project sales 

to decline 36 percent in 2006, and an additional 53 percent in 2007. 

CEA Is the Leader in DTV Consumer Education 

The CE industry has every business incentive to educate consumers about the 

qualities and features of the DTV they want to purchase. That is why CEA runs 

an extraordinary educational effort to ensure that consumers are fully informed 

about their DTV options. 

Just last month, the National Association of Consumer Agency Administrators 

(NACAA) presented CEA and the FCC with the prestigious Achievement in Consumer Education Award for our joint efforts in informing consumers about the transition to DTV, and helping consumers make the digital choices that are right for 

them. We are committed to continuing our educational efforts with the FCC, and 

invite all interested parties to join in our campaign to inform Americans about the 

digital transition. 

As the primary conduit to consumers, it is critical that retail floor staff is properly 

equipped to provide accurate and easy-to-understand information. 

CEA aggressively responded to this challenge and created a comprehensive DTV 

retailer-training program called CEKnowHow (it can be viewed online at 

www.ceknowhow.com). This program is available to all retailers over the Internet. 

It equips them with the most up-to-date online training for sales associates, so that 

they can effectively respond to consumer inquiries on DTV and HDTV. 

CEA also designed, printed, and made available to retailers a ‘‘tip sheet’’ that explains the DTV transition and basic DTV terms and technology. In late 2004, CEA 

partnered with the FCC and the Consumer Electronics Retailers Coalition (CERC) 

to distribute more than 750,000 copies of the tip sheet to consumers, retailers, and 

professional home theater installers. 

More recently, the Consumer Electronics Retailers Coalition (CERC) issued its 

own retail consumer guide, ‘‘What you need to know about the ‘DTV Transition’’— 

A Dozen Questions & Answers,’ that focuses on the choices that consumers will have 

when analog broadcasting ends. This is available at www.ceretailers.org. 

Over the last year, CEA also visited with major consumer electronics buying 

groups and talked to more than 2,000 dealers to bring them the latest information 

on the DTV transition. We have collaborated with Comcast on an educational DVD 

that covers DTV information ranging from basic definitions to the equipment required to receive and view HDTV content via antenna, satellite or cable delivery. 

CEA also is making every effort to reach out directly to consumers. Millions of 

readers across the country saw our inserts in TV Guide and Sports Illustrated magazines explaining the basics of DTV, how to get a signal, what product choices are 

available, and so on. We also have showcased HDTV before hundreds of thousands 

of consumers through exhibits at home design shows, and trade exhibitions, and 

viewing parties in public venues across the Nation. 

CEA exposes millions of consumers to HDTV through our nationally pre-packaged 

video and news releases, as well as our national CEA media tour. And our quarterly 

HDTV Guide is the single most authoritative list of the DTV products and programming currently available. 

Meanwhile, CEA has taken the lead in promoting consumer awareness and use 

of over-the-air digital television reception. Through our AntennaWeb program, consumers can visit a website (www.antennaweb.org), enter their home address, and 

find the optimal outdoor television antenna for their specific location. This site receives approximately 100,000 hits per month. 

We also see it as our obligation to recognize those who are going above and beyond the call of duty in furthering the DTV transition. Every year, our Academy 

103 

of DTV Pioneers honors the best of the best in HDTV programming, reporting and 

retailing. And, as it should be, every year the categories get more crowded and competitive. 

This is just a sampling of CEA’s strong commitment to educating consumers and 

retailers about the DTV transition. 

In short, for the DTV transition, everything is moving rapidly in the right direction. Product sales continue to rise, as prices decline. The amount and variety of 

HDTV programming continues to increase. Content delivery industries are increasingly jumping onto the HD bandwagon. Exciting new products are rolling into the 

marketplace. Consumer and retailer education is advancing. By almost any measure, digital television is a marketplace success. 

Now is the appropriate time to take the next step and bring the broadcast digital 

transition to a successful conclusion, just as envisioned by this Committee when the 

Congress loaned public spectrum to the broadcasters for the DTV transition a decade ago. 

The Time for a Hard Deadline Is Now 

The 700 MHz band currently occupied by analog broadcasters is beachfront property on the spectrum landscape. The prompt recovery of this spectrum by Congress 

will produce immense public interest and economic benefits while fostering innovation and protecting our national security. 

First, the analog TV broadcast spectrum is ideal for advanced wireless broadband 

applications. A hard date will spur innovators to develop a broad range of new wireless technologies and services. These new wireless services will offer unprecedented 

access to rural and underserved areas, while creating competition that will drive 

down prices for all wireless consumers. 

A hard date also will fundamentally change and accelerate the DTV marketplace. 

With the certainty of a hard deadline, stations will know what to broadcast, manufacturers will know what to make, retailers will know what to stock, and consumers 

will know what to buy. With the completion of the digital transition now an imminent reality, all affected industries will shift our consumer education efforts into an 

even higher gear. 

But the rationale for a hard date goes deeper than promoting new technologies 

and broadband access. As reinforced by recent evacuation of the White House and 

this Capitol, the gravest threat to our safety is another national calamity like we 

suffered on September 11, 2001. It is now more apparent than ever the 700 MHz 

band held by broadcasters is essential to the swift and effective response of Homeland Security, police, firefighters, and other first responders. 

That is why the Association of Public Safety Communications Officials has implored you to set an analog broadcasting cutoff date, stating that ‘‘the security of 

our homeland and the lives and property of our citizens as well as our responders 

are at stake.’’ 

The key to unleashing these benefits is for a hard date to be set, and set now. 

The Vast Majority of Americans Now Choose Cable or Satellite To Provide 

Their Television Programming 

Americans now have more ways to receive video programming than ever before. 

The vast majority of Americans receive local and network broadcast signals via 

cable and satellite (and will soon have these services available via telephone, mobile, 

and wireless broadband). Meanwhile, the statistics show that a small and declining 

number of households now rely exclusively on a free over-the-air broadcast signal, 

and a minimal number of TV sets are actually used to watch broadcast TV. 

If there is any doubt about this, consider the total lack of public outcry over the 

recent announcement that Monday Night Football, a long staple of broadcast TV, 

will soon be available only to satellite and cable households. 

Indeed, our research shows that only 32.7 million (or 11.5 percent) of the 285 million television sets used in the United States are used to view over-the-air television 

programming. 

This phenomenon is driven by the fact that television today is largely a wired (i.e., 

cable or satellite) service. Of the nearly 110 million American homes with at least 

one TV, 60 percent receive a cable signal, and 24 percent receive a DBS signal. Our 

research shows that roughly 2 percent receive both cable and DBS, while another 

2 percent of homes use their sets exclusively with VCRs, DVD players, or videogame 

systems and do not use their sets with over-the-air or subscription services. 

In total, approximately 86 percent of American homes get their TV signal from 

cable or satellite (and thus network and local broadcast feeds). This means that if 

the analog cutoff occurred today, approximately 12 percent of the population of 110 

104 

million TV households would not have access to a broadcast signal through cable 

or satellite. 

And this number is shrinking every year. Cable and satellite penetration continues to grow by about one to 2 percentage points annually. What’s more, the market research firm Sanford Bernstein has just concluded that cable and satellite subscribers are growing 3.6 percent annually. 

With only 32.7 million sets used to view over-the-air television, it is clear that the 

vast majority of TVs in the U.S. are not used for this purpose. The number of overthe-air homes will decline even further as more and more Americans pay to subscribe to TV services, including new technologies such as Internet-Protocol TV, and 

television via telephony, and over powerlines. Additionally, growing broadband penetration will continue to change how Americans receive their programming. In fact, 

broadcasters are increasingly providing their content through other means including 

the Internet and mobile phones. Just recently, Verizon announced a deal where it 

would provide NBC’s feed over its fiber network. 

With respect to consumers with neither cable nor satellite, our research shows 

that this population’s decision not to subscribe generally is not driven by economic 

reasons. Indeed, our data shows that 68 percent choose not to subscribe for a reason 

other than cost—with almost a third reporting that they do not subscribe because 

they ‘‘don’t watch that much TV.’’ 

Those who do not subscribe to cable or satellite watch on average 30 percent less 

television per week than cable and satellite subscribers. Nearly six of ten say television simply is not a high priority for them. Fewer than three in ten indicate that 

insufficient funds play a role in their decisions not to subscribe to cable or satellite 

television. 

I should note that this population of over-the-air households does not eschew technology. Seventy-nine percent of antenna-only households own a home radio; sixty 

percent own a cell phone and desktop or laptop PC; and forty-eight percent have 

some type of dial-up or broadband Internet connection. 

Some opponents of a hard deadline raise concerns about the unconnected analog 

TV sets in households that subscribe to satellite or cable TV, and claim that most 

of these sets are used with antennas for watching over-the-air analog signals. In 

fact, primary viewing most often occurs on the TV that is connected to pay services. 

Of the 173.3 million sets in cable homes, only 4.4 million are used to receive overthe-air broadcasts. More often, the unconnected TVs are shunted to a less used room 

and hooked up with a DVD player, VCR, or video game. Indeed, our research shows 

these sets are used at least half the time for one of these many alternate uses. In 

addition, as many cable companies no longer have a monthly charge for additional 

outlets, this issue has become increasingly irrelevant for cable homes. 

In households utilizing an antenna, TVs connected to the antenna are often primarily used for an activity other than watching broadcast television. Of the 25.9 

million sets in exclusively over-the-air homes, 3.4 million are used exclusively for 

watching pre-recorded content, playing video games, and other non-broadcast uses. 

Further, in these households, the TV connected to an antenna is used approximately 

40 percent of the time with DVD players, VCRs, and videogame systems. 

Our research indicates that three-quarters of antenna-only households are willing 

to take some sort of voluntary action to ensure that they continue to receive television programming when analog broadcasts end. Twenty-two percent indicated that 

they would buy a new TV capable of receiving DTV signals; forty-two percent would 

buy a $60 set-top converter; 9 percent would start subscribing to cable or satellite; 

and 22 percent would do nothing since the TV isn’t used to watch over-the-air 

broadcasts. 

At the same time, we must acknowledge that some consumers may be adversely 

impacted by a hard date. That’s why we respect and understand the interest of 

some policymakers in creating a program whereby those viewers would have access 

to low-cost digital-to-analog converters. In the past, our members have testified that, 

with economies of scale, converter prices will be in the $60 range by the time of 

the proposed cut-off date. One extremely serious development that will interfere 

with this projection would be the imposition of state or national energy usage mandates on converters, which would adversely impact converter price and availability. 

By the time of a year-end 2008 cut-off—combining present adoption trends for 

cable and satellite, and forecasts for uptake of recently announced TV services from 

telcos like Verizon and SBC, as well as the jump in purchases likely to occur with 

a hard cutoff date—the number of American homes that would lose their primary 

video signal will likely would be closer to 6.8 percent. 

We are aware that certain other surveys purport to show a much higher level of 

reliance on over-the-air broadcasting. However, CEA stands firmly by our survey 

and data results. We are extremely proud of our long-standing dedication to proVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00108 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
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viding accurate and sound information to policymakers, the technology industry, 

and the financial community. 

Compared to other surveys, our data is extremely comprehensive. To our knowledge, CEA’s new research is the only survey that asks about the specific usage of 

each and every individual set in a household. Unlike other surveys, we also limited 

our survey to TVs in the household that had been turned on within the prior 3 

months, thereby allowing us to have an accurate, real world analysis of TVs that 

are actually in use. 

The accuracy of the various survey methodologies and results are important because they indicate the potential cost of proposed programs to minimize the viewer 

impact of the analog cutoff. We are glad to provide CEA’s complete survey documents and offer to further analyze the data in any way that assists Congress in developing proposals to minimize viewer impact. 

The simple fact is that, while an analog broadcasting cut-off is important for our 

nation, it will have no impact on the viewing habits of the vast majority of Americans. We believe the types of education and public awareness steps that have been 

discussed with your colleagues can effectively address the needs of those who wish 

to rely only on broadcast television. 

CEA Endorses a Hard Deadline, and Offers Suggestions To Bring About a 

More Expeditious Transition 

In the United States, the transition to digital television has always been envisioned as having two purposes. The first was to bring the wonders of digital TV, 

and especially high-definition TV to American consumers. The second was to capture the public interest and economic benefits of the return of the analog spectrum. 

We are now well on our way toward accomplishing the first objective, and it is 

appropriate that we turn our attention to the second. 

CEA unequivocally endorses the establishment of January 1, 2009, for the recovery of the analog spectrum. The setting of a date certain will benefit consumers as 

spectrum is reallocated for purposes ranging from public safety communications to 

exciting new services such as wireless networking and Internet access. 

CEA offers a number of suggestions that will help this Committee craft legislation 

to hasten the digital transition, while ensuring the most expeditious, practical, and 

consumer friendly result. 

Specifically, we recommend the following: 

1. Tuner Mandate Acceleration: A current FCC proceeding seeks comment regarding the acceleration from July 1, 2007, to no later than December 31, 2006, of the 

requirement for manufacturers to include over-the-air tuners in 13 to 24 inch sets 

and other TV reception devices (such as VCRs, DVDs and DVRs). 

In terms of any proposals to accelerate the tuner mandate requirements, we are 

concerned that any proposed changes in the existing requirements would severely 

reduce the retail market for these products. 

Manufacturers need a minimum of 18 to 24 months to plan, develop, and deploy 

new equipment. An accelerated tuner mandate could force some manufacturers who 

determine that meeting the new regulations are not feasible (and fear inability to 

comply with the FCC’s regulations) to move to tunerless sets or to stop manufacturing altogether the small-screen TV models which cannot be fitted with digital 

tuners—which many manufacturers are reluctant to do, and which would defeat the 

purpose of the tuner mandate itself. 

Even if manufacturers were able to meet a foreshortened production schedule, a 

date any earlier than March 2007, could result in cost increases that the marketplace cannot sustain. Of course, this assumes that legislation would be enacted in 

September 2005, to ensure an 18-month manufacturing schedule that would enable 

manufacturers to meet a March 2007, date. Some of our members believe that accelerating the tuner deadline for 13 to 24 inch sets and other TV reception devices to 

any earlier than March 2007, would double the development costs for manufacturers, as well as double the price of a typical 13 inch television to consumers. Retailers have pointed out that their customers buy TVs in this product category often 

out of necessity; many buy a $69 TV on a layaway plan. If the product is rejected 

by lower income and other consumers because the price exceeds their budget, it will 

not be carried by retailers and, eventually, not produced by manufacturers. This 

helps neither broadcasters, consumers, nor the transition, and irrespective of any 

later subsidy plan, places the burdens of the transition on those who can least afford 

it. 

The FCC and the Congress have consistently recognized the 18-month manufacturing cycle when they have imposed requirements on TV set manufacturers. The 

V-chip and closed captioning regulations are key examples. 

106 

The unfortunate result of an overly-aggressive acceleration of the tuner mandate 

deadlines would be to decrease the number of DTV tuners in the marketplace, which 

clearly does not serve the transition. 

We recognize there is a growing consensus that some acceleration of the FCC’s 

present July 1, 2007 deadline is desirable. While manufacturers have relied in good 

faith on the existing July 2007 date, CEA believes that March 2007 is the earliest 

possible date, consistent with the manufacturing and retail placement cycle, for the 

integration of digital reception capability into 13′′ to 24′′ sets and other devices having an analog tuner. Any deadline prior to March 2007 will only result in the absence of smaller TVs and other products from the marketplace as they are pulled 

from distribution in advance of the deadline. 

A March 2007 date allows time for economies of scale to develop. This will lessen 

the ‘‘sticker shock’’ for consumers, allowing these products a chance to compete 

against less expensive, tuner-less alternatives. Indeed S. 1268 (the SAVE LIVES 

Act) sponsored by Senators McCain and Lieberman, proposes a March 1, 2007 date 

in order to minimize market disruption and consumer harm. 

2. Digital Carriage and Non-Degradation: We urge the Committee to address the 

important issue of signal degradation, and ensure that a digital signal is carried 

under all circumstances. It is fundamental that when cable operators are carrying 

broadcast signals digitally, they should not be allowed to reduce the sound or picture quality, or alter or eliminate program related data. American households—most 

of whom are cable customers—have invested more than $25 billion dollars in highdefinition televisions. If a broadcaster is providing HDTV programming and Dolby 

Digital surround sound, then that is what HDTV owners who subscribe to cable 

should see and hear. 

3. Television Labeling: CEA fully supports educational labels in connection with 

analog televisions when paired with the certainty of a hard date. However, manufacturers will need 120 to 180 days to include the labels on the product itself to incorporate this extra step into the manufacturing cycle. A period of 90 days would 

be required if the label is designed as a sticker placed on the outside of the product 

packaging. Any shorter notice would mean that highly automated production lines 

would have to be stopped and re-organized at great cost, or else the labels would 

have to be added manually at similarly great cost. Conversely, with enough advance 

notice to automate the labeling process, labeling is of course a much less significant 

cost. 

Retailers also have accepted an obligation, once a hard date is set, to display consumer advisory labels in the vicinity of sets with only analog tuners and in their 

web-based marketing—in each case with some variations according to the store arrangement and means of display. Additionally, they have indicated that they plan 

to assist their customers with supplemental materials and to propose options to 

their customers targeted to the customer’s specific needs. In order to prevent screen 

damage upon removal by a consumer or retailer, consideration should be given regarding the necessity of placing the label ‘‘on-the-screen’’ so long as it is attached 

to the product as shipped. 

CEA urges that any label language should be concise—otherwise, consumers may 

not read or understand it. CEA and the Consumer Electronics Retailers Coalition 

recommends the following language: 

‘‘This TV has only an ‘analog’ broadcast tuner so will require a converter box 

after [date] to receive over-the-air broadcasts with an antenna, because of the 

transition to digital broadcasting on that date. (It will continue to work as before with cable and satellite TV systems, gaming consoles, VCRs, DVD players, 

and similar products.)’’ 

We suggest that the FCC be tasked to work with industry and consumers to develop an appropriate label along these lines, as proposed in S. 1268, the SAVE 

LIVES bill. 

4. Channel Allotments: CEA supports a timetable of December 31, 2006, as the 

final date for the FCC to issue final broadcaster channel allotments, and an additional 7 months to conclude any reconsideration of such allotments. We urge the 

Committee not to extend the reconsideration period beyond 7 months, as this could 

cause the final end-date for analog broadcasting to slip to 2010. 

5. Broadcaster Disclosures: In light of our own aggressive consumer education efforts, CEA has been disappointed with the paltry level of DTV consumer education 

offered by the broadcasters to date, especially the almost complete lack of broadcaster-sponsored public service announcements (PSAs). We urge the Committee to 

address this issue, and we urge that any legislation require increased broadcasterconsumer education activities. Specifically, the Committee should consider starting 

107 

the required announcements at least 1 year before analog shut-off, and increasing 

the number of ads from two per day—at least in months closest to the analog shutoff—and imposing separate educational requirements on networks, as well as local 

broadcasters. This makes sense because broadcasters are the ones with a vested interest in transitioning the remaining over-the-air viewers to digital. Broadcasting is 

a powerful and effective communications medium, and it is essential that the broadcasters themselves step up and do their part to educate the Nation about the transition to digital television. 

6. Broadcaster Compliance: Ensure that broadcasters comply with Federal Communications Commission maximization/replication requirements. As of today, more 

than 100 stations have requested a waiver and extension of the FCC’s July 1, 2005 

requirement for maximization and replication for stations affiliated with a top-four 

network and located in the top-100 markets. Broadcasters must comply with FCC 

rules to ensure a successful and rapid transition. Despite the broadcasters’ words 

about the importance of the DTV transition and all they have expended to convert 

to digital, the real test is what they are doing. They are seeking extensions and 

waivers today, just as they have been doing for the last 5 years. Only a hard shutoff date enacted into law will make them realize that the DTV conversion is inevitable and for real. 

Conclusion 

Setting a realistic date certain for the end of analog broadcasting and the recovery 

of the analog spectrum for new purposes is the right thing to do. It is right for consumers, it is right for innovation, and it is right for America’s national security. A 

hard deadline will help foster the creation of new, high-skill jobs, and it will promote America’s technology leadership in an increasingly competitive world. 

We commend the Committee for its efforts to bring the broadcast DTV transition 

to a successful and timely conclusion. In the meantime, we will continue our efforts 

to educate consumers about digital television. I pledge CEA’s continuing commitment to working with this committee and other stakeholders to ensure the most 

timely and consumer friendly transition, as well as a prompt return of the analog 

broadcast spectrum. 

The CHAIRMAN. Thank you. 

And, last witness, Michael Calabrese, the Vice President and Director of Wireless Future Program for the New America Foundation. 

Mr. Calabrese? 

STATEMENT OF MICHAEL CALABRESE, VICE PRESIDENT/ 

DIRECTOR, WIRELESS FUTURE PROGRAM, NEW AMERICA 

FOUNDATION 

Mr. CALABRESE. Yes, good afternoon. My name is Michael 

Calabrese. I direct the Wireless Future Program with New America 

Foundation, which is a nonpartisan policy institute here in Washington. Thank you for inviting my testimony today. 

The TV band has become a vast wasteland of underutilized airwaves that are urgently needed for both public safety and for wireless broadband services, which I’ll emphasize. On average, a highpowered TV station operates on each of those channels in only 15 

of the Nation’s 210 local television markets. And in every market, 

a low and steadily shrinking share of American homes rely on overthe-air reception at all. 

Because of the urgent need to reallocate these frequencies, it is 

critical that Congress not repeat the mistake of the Balanced Budget Act of 1997. The 1997 Budget Act set a deadline for TV band 

auctions, but not a policy to ensure that the spectrum would be 

cleared by a date certain. As a result, in 2002, most of those auctions were canceled, or generated very low returns, for one primary 

reason: wireless firms are not willing to pay market prices for spectrum indefinitely encumbered by politically powerful TV stations. 

108 

But a credible hard deadline, one reinforced by a broad consumer 

compensation program, can spin straw into gold. 

Based on recent private-spectrum transactions and public bids, 

the ten channels that could be licensed are expected to generate between $15 and $30 billion. Because this auction value vastly exceeds the Committee’s budget requirements, we recommend that 

Congress use this opportunity to make three telecom policy investments with long-term benefits for the general public. 

The first is a broad-based converter rebate that ensures all 

households still relying on analog over-the-air are held harmless. 

By earmarking a relatively small share of the expected auction revenues for a consumer compensation fund, Congress can both protect vulnerable consumers, and ensure that potential wireless bidders’ business plans will not be disrupted by a voter backlash. Providing one $50 converter box or rebate to each of the 16 million households that rely exclusively on over-the-air reception 

would cost about $800 million. Providing one rebate to each of the 

44 million households that report relying at all on over-the-air reception for their local channels would cost about $2.2 billion. So, 

that’s the range. 

In either case, the cost represents merely a fraction of the revenue that TV band auctions will raise if, and only if, bidders are 

confident the deadline for clearing those channels will not again be 

delayed. Although a means-tested compensation program would be 

less expensive, we believe it is neither administratively practical 

nor fair. If the Committee does not choose to means test the consumer rebate, we believe that, on balance, it would be most cost efficient to reimburse qualified retailers. 

Qualified retailers could be required to offer converters certified 

by the FCC to limit the consumer share of the cost to a small copay and to provide the degree of technical support. If possible, any 

rebate program should also give consumers the choice to use it to 

offset the cost of a converter box, a new digital TV, or even a satellite dish or cable set-top box, since any of these devices will preserve access to broadcast channels. 

The second public investment that should be part of this transition involves promoting the rapid deployment of affordable and mobile broadband services. Because wireless signals at this frequency 

pass easily through walls and trees, reallocating the 700 megahertz 

band could jumpstart the deployment of more affordable wireless 

broadband connections, particularly in rural areas. 

The U.S. has fallen from third to 16th in broadband adoption 

worldwide over the past 5 years, according to the ITU. The lack of 

affordable highspeed Internet access for millions of homes and 

small businesses in the U.S. is a threat to American competitiveness. We recommend that Congress address this broadband gap by 

using the DTV transition to encourage both licensed and unlicensed wireless broadband networks as competitive alternatives to 

wireline cable, and DSL offerings. 

Thousands of mostly rural commercial Internet service providers, 

or WISPs, and dozens of municipalities, already use the crowded 

unlicensed band at 2.4 gigahertz to deploy WiFi and other wireless 

connections to hundreds of thousands of businesses and consumers, 

at distances of up to 30 miles. The problem is that the unlicensed 

109 

WiFi bands are small and shared with over 200 million consumer 

devices, from microwave ovens to cordless phones. 

The DTV transition can promote rapid, affordable broadband in 

two ways. First, from the ten channels now designated for auction, 

the FCC should be directed to reallocate at least three, roughly 20 

megahertz, for shared unlicensed use. Second, the FCC should be 

directed to complete its pending rulemaking that would open unassigned TV channels below Channel 52 for unlicensed public access, 

subject to strict rules to avoid interference. 

Finally, the $15 billion to $30 billion market value of the ten 

channels available for auction makes possible a third investment. 

Any auction of the people’s airwaves should be seen as an opportunity to invest in the digital future of our public media and educational institutions. The proceeds exceeding the CBO score could 

be earmarked to capitalize a trust fund, to finance ongoing investments in both educational public media and e-learning content and 

applications. We recommend that the Committee incorporate within this DTV legislation funding for the Digital Opportunity Investment Trust, or DOIT Act that was introduced in May by Senator 

Burns, Senator Snowe, here on your committee, as well as Senators 

Dodd and Durbin, which earmark spectrum revenue for these purposes. 

Thank you for your time, and I look forward to answering any 

questions. 

[The prepared statement of Mr. Calabrese follows:] 

PREPARED STATEMENT OF MICHAEL CALABRESE, VICE PRESIDENT/DIRECTOR, 

WIRELESS FUTURE PROGRAM, NEW AMERICA FOUNDATION

Thank you, Mr. Chairman, and members of the Committee, for this opportunity 

to testify today. My name is Michael Calabrese, Vice President of the New America 

Foundation, a nonpartisan policy institute here in Washington. I direct New America’s Wireless Future Program, which is dedicated to promoting more efficient and 

fair access to the public airwaves. 

I will focus largely on the opportunity to use this DTV legislation to advance the 

national interest in more rapid and affordable deployment of high-speed broadband 

access, particularly in rural and other underserved areas. Because the market value 

of the channels designated for auction vastly exceed the Committee’s budget requirements, I believe the Committee should use this bill to pursue policies that will 

be far more beneficial to the Nation than a budget-driven bill that merely maximizes short-term auction revenues. 

Several years ago we began urging members of this committee to set a hard deadline for the end of the digital TV transition—and to make that deadline realistic by 

earmarking a portion of the resulting spectrum revenue to compensate consumers 

needing to purchase a digital-to-analog converter box. TV channels 52 to 69 have 

become a vast wasteland of underutilized airwaves that are urgently needed for 

both public safety and for wireless broadband services. On average, a high-power 

TV station operates on each of those channels in only 7 percent of the Nation’s 210 

local television markets; and in every market, a low and steadily shrinking share 

of American homes rely on over-the-air (OTA) reception at all (see Table 1 below). 

Table 1: How U.S. TV Households Receive Television: 1994 vs. 2004* 

TV Households in the United States Dec. 1994 

(Millions) 

Dec. 1994 

(Share of All TV 

Households)(%) 

June 2004 

(Millions) 

June 2004 

(Share of all TV 

Households)(%) 

Change 

(%) 

Over-the-Air Only 31.5 33 16.1 15 ¥48.9 

Total MVPD Subscribers** 63.9 67 92.3 85 44.4 

Cable 59.7 66.1 

DBS 0.6 23.2 

110 

Table 1: How U.S. TV Households Receive Television: 1994 vs. 2004*—Continued 

TV Households in the United States Dec. 1994 

(Millions) 

Dec. 1994 

(Share of All TV 

Households)(%) 

June 2004 

(Millions) 

June 2004 

(Share of all TV 

Households)(%) 

Change 

(%) 

Other 3.6 3.0 

* 2004 Data: FCC, ‘‘Annual Assessment of the Status of Competition in the Market for the Delivery of Video 

Programming: Eleventh Annual Report,’’ January 14, 2005. Available at: http://hraunfoss.fcc.gov/ 

edocslpublic/attachmatch/FCC-05-13A1.pdf; 1994 Data: FCC, ‘‘Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming: Second Annual Report,’’ December 11, 1995. Available at: http://www.fcc.gov/Bureaus/Cable/Reports/. 

**MVPD = Multichannel Video Programming Distributors are Cable, DBS, and other services. 

The Importance of Reallocating Airwaves From Broadcast to Broadband 

The DTV transition no longer has anything to do with high-definition TV, or with 

U.S. competitiveness in TV manufacturing, as Congress was led to believe a decade 

ago. Today the true threat to American competitiveness is the lack of affordable, 

high-speed Internet access for millions of homes and small businesses. The U.S. has 

fallen from 3rd to 16th in broadband adoption worldwide over the past 5 years, according to the International Telecommunications Union (ITU). Last fall, a Fortune 

magazine cover story reported that ‘‘nearly everyone in South Korea has Internet 

access that puts Americans to shame.’’ In South Korean cities, ‘‘broadband is as 

basic a utility as water and electricity . . . ordinary households get faster Internet 

connections than all but the biggest U.S. businesses.’’ The typical cable and telephone broadband connection here is ten times slower than the 20 megabits-per-second speeds offered in South Korea for the same price or less. This ‘‘broadband gap,’’ 

if it continues, will result in slower rates of U.S. innovation, e-business creation, job 

growth, and technological competitiveness in an increasingly digital world. 

Table 2: International Broadband Adoption: Selected Rankings* 

Rank Country Broadband subscribers per 

100 inhabitants 

1 South Korea 24.9 

2 Hong Kong 20.9 

3 The Netherlands 19.4 

4 Denmark 19.3 

5 Canada 17.6 

16 United States 11.4 

* International Telecommunications Union, cited in National Journal, available at: http:// 

www.njtelecomupdate.com/lenya/telco/live/tb-QGBX1114459808856.html. 

The DTV transition provides an opportunity for Congress to open a third and 

more affordable broadband pipe to homes and small businesses. Industry studies 

show that because TV band frequencies (700 MHz band) propagate easily through 

obstacles, such as walls and trees, access to these low frequencies can reduce the 

deployment costs for wireless networks by a factor of three or more compared to cellular bands above 2 GHz. Congress can choose to rely on the cable and telco wireline 

duopoly to trench fiber to every home and business—or at least those in locations 

that will be profitable to connect. Or we can open the broadband pipe the public 

already owns—the public airwaves—as a common carrier for communities, entrepreneurs and innovation. 

Because of the urgent need to reallocate these frequencies, it is critical that that 

Congress not repeat the mistake of the Balanced Budget Act of 1997. In an effort 

to score revenue, the 1997 OBRA set a deadline for TV band auctions, but not a 

policy to ensure that the spectrum would be cleared by a date certain. As a result, 

in 2002, most of the auctions were canceled or generated very low returns for one 

primary reason: wireless firms are not willing to pay market prices for spectrum indefinitely encumbered by politically-powerful TV stations. But a credible hard deadline for channel clearance—one reinforced by a broad consumer compensation program—can spin straw into gold. In addition to cellular incumbents, many new wireless service providers are expected to bid on 700 MHz licenses, as they are so well 

suited for video, mobile, and other consumer broadband applications. Based on recent private-spectrum transactions and public bids—for cellular spectrum with far 

111 

1See the market analysis by the Brattle Group, in the letter from William P. Zarakas and 

Dorothy Robyn, Principals, Brattle Group, to the Hon. Joseph Barton, May 18, 2005, available 

at http://www.brattle.com/ldocuments/News/News253.pdf. 2Leading manufacturers project a range of $50 (LG/Zenith, Zoran) to $67 (Motorola), assuming industry-wide demand of 10 million units. See ‘‘Tech Company Touts Solution to Quick DTV 

Transition,’’ Communications Daily, May 2, 2005, and FCC MB Docket No. 04–210, Media Bureau Staff Report Concerning Over-the-Air Broadcast Viewers. 

less valuable propagation characteristics—the 10 channels that could be licensed are 

expected to generate between $15 and $30 billion.1

The tremendous market value of the 10 channels (60 MHz) available for auction 

gives Congress the leeway to avoid passing another shortsighted, budget-driven bill. 

Because auctioning even 40 MHz of TV band spectrum will generate $10 billion or 

more, we recommend that Congress use this opportunity to make three telecom policy investments with long-term benefits for the general public: 

• A broad-based consumer converter box rebate that ensures all households that 

still rely on analog over-the-air reception are held harmless. 

• The reallocation of 20 of the 60 MHz of spectrum available for wireless services 

to unlicensed broadband networks, as well as the opening of unassigned DTV 

channels in each market for sharing by low-power unlicensed devices. 

• The earmarking of TV band auction revenue in excess of the CBO ‘‘score’’ into 

a trust fund to help finance the digital future of public broadcasting and elearning technologies. 

The ‘‘Last Granny Rule’’: A Small Share of the Auction Revenue Can 

Compensate Consumers and Ensure No Additional Delay in 

Reallocating TV Frequencies 

Because ‘‘free’’ TV has taken on the nature of an entitlement in American culture, 

legislation that makes analog TV sets obsolete will be keenly felt, even in middleclass homes, as a type of ‘‘taking.’’ This is the unwritten obstacle to ending the DTV 

transition that we have called the ‘‘Last Granny Rule’’: even if the FCC or Congress 

sets a hard deadline, it will be subject to delay (or defeat) if a substantial share 

of voters relying on analog OTA view the government as making their TVs useless 

without the purchase of a converter box (or new DTV). Manufacturers, including 

LG/Zenith and Zoran, now estimate that in mass production, a digital-to-analog converter would sell for $50. 2

Table 3: The Cost of Four Options for a DTV Transition Consumer Subsidy* 

Household 

Eligibility based 

on reliance on 

over-the-air (OTA) TV 

Number of 

Households 

Eligible 

Subsidy/ 

Converter 

Assumed 

Take-up Rate 

Total Cost (100% 

Subsidy) 

Cost as 

percent of 

Likely Auction 

Value of 

Unencumbered 

Spectrum 

($20B)** 

Option #1: 

Only low-income OTA 

exclusives; 

Limit one 

set/household 

7.09 m (44 percent of OTAonly households) 

$50 7.09 m (100 

percent) 

$355 million 1.8 

Option #2: 

All exclusive 

OTA households; Limit 

one set/ 

household 

16.1 m (15 percent of 108.4 

m TV households) 

$50 16.1 m (100 

percent) 

$805 million 4.0 

Option #3: 

All TV households; Limit 

one set/ 

household 

108.4 m (16.1 

m OTA + 

92.3 m nonOTA) 

$50 43.8 m (100 

percent of 

OTA + 30 

percent of 

non-OTA)*** 

$2.2 billion 11.0 

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3 NAB/MSTV data indicates 28 million unwired sets are in use in the Nation’s 92.3 cable/DSL 

households. Approximately 30 percent of subscription TV households would thus have any use 

for a converter subsidy. See NAB/MSTV, Comments, In the Matter of Over-the-Air Broadcast 

Viewers, August 11, 2004, MB Docket 04–210. 

Table 3: The Cost of Four Options for a DTV Transition Consumer Subsidy*—Continued 

Household 

Eligibility based 

on reliance on 

over-the-air (OTA) TV 

Number of 

Households 

Eligible 

Subsidy/ 

Converter 

Assumed 

Take-up Rate 

Total Cost (100% 

Subsidy) 

Cost as 

percent of 

Likely Auction 

Value of 

Unencumbered 

Spectrum 

($20B)** 

Option #4: 

(NAB Scenario)**** 

All OTA sets 

in all households 

108.4 m (16.1 

m OTA + 

92.3 m nonOTA) 

$50 73 m (45 m 

sets in OTA 

+ 28 m sets 

in non-OTA 

hh’s) 

$3.6 billion 18.0 

* The FCC’s Report Concerning Over-the-Air Broadcast Television Viewers notes that 14.98 percent of U.S. 

TV households rely exclusively on OTA, citing the 2005 MVPD Report. See: FCC, ‘‘Media Bureau Staff Report 

Concerning Over-the-Air Broadcast Viewers,’’ February 28, 2005, and FCC, ‘‘Annual Assessment of the Status 

of Competition in the Market for the Delivery of Video Programming: Eleventh Annual Report,’’ January 14, 

2005. Available at: http://hraunfoss.fcc.gov/edocslpublic/attachmatch/FCC-05-13A1.pdf. 

** Market Value of unencumbered spectrum is at least $20 billion at $1.65 per MHz/pop, based on the FCC’s 

valuation of the Nextel spectrum swap, and recent private cellular license sales, as above. 

*** NAB/MSTV data indicates 28 million unwired sets are in use in the Nation’s 92.3 cable/DSL households. 

See NAB/MSTV, Comments, In the Matter of Over-the-Air Broadcast Viewers, August 11, 2004, MB Docket 04– 210. 

**** Option #4 is the solution most called for by the NAB, which assumes that a converter subsidy be made 

available for every analog TV set in all households that rely on OTA (i.e., all sets not connected to cable, DBS, 

or another subscriber service.) 

By earmarking a relatively small share of the expected auction revenues for a consumer compensation fund, Congress can both protect vulnerable consumers while 

also ensuring potential wireless bidders that their business plans won’t be disrupted 

by a voter backlash. As the table just above demonstrates, providing one $50 converter box to each of the 16 million households that rely exclusively on OTA reception would cost about $800 million. The cost of one converter box for each of the 

nearly 44 million households (including 28 million cable and DBS subscribers) that 

report relying at all on OTA reception is $2.2 billion. 3 In either case, the cost represents merely a fraction of the revenue that TV band auctions will raise if, and 

only if, bidders are confident the deadline for clearing those channels will not again 

be delayed. 

Options for Making Consumer Rebate Generally Available 

1. A Consumer Mail-In Rebate 

• Advantages: Rebate forms can be used to limit eligibility—or limit the number 

of subsidies per household—by tracking consumer information. 

• Disadvantages: Consumers must pay up-front before getting a refund, which 

disproportionately impacts low-income and fixed-income households; the paperwork required to process rebate applications would be costly for both consumers 

and government; it may be impossible to limit the subsidy to low-income households without costly and intrusive cross-checking through IRS. 

2. A Qualified Retailer Rebate 

• Advantages: Consumers are not required to pay anything up-front; offering the 

converter ‘‘free,’’ or at very low-cost (co-pay), eliminates ‘‘red tape’’ for the customer, reduces administrative costs, and enhances satisfaction with process; 

participating retailers could be required to offer optional installation and/or 

technical support services. 

• Disadvantages: Retailers cannot limit the eligibility, or number of converter 

subsidies, by household (individuals acquiring converters from multiple stores); 

limits could be enforced only by mailing a coupon to each eligible household 

(e.g., one per household via counties). 

113 

4 ‘‘Warp Speed for Wireless Networks,’’ Business Week, June 21, 2005. 

3. A Refundable Tax Credit (Refund Occurs Whether There Is A Tax Liability Or 

Not) 

• Advantages: Easier to confer a means-tested subsidy; reduces fraud by linking 

to consumer information; administratively efficient if done during a single tax 

year. 

• Disadvantages: Lower take-up rate possible among low-income households who 

lack easy access to tax information, or do not file taxes at all; substantial timedelay between purchase and the tax refund; additional tax form complexity. 

We believe that a means-tested compensation program is neither administratively 

practical nor fair. Verifying eligibility requires access to tax return information— 

which rules out rebating the subsidy directly to retailers. A mail-in application (Option 1 above), premised on the consumer’s estimate of family income, would raise 

concerns about privacy and accuracy. While a refundable tax credit (Option 3 above) 

could piggy-back the existing individual tax return process by adding a line for a 

single tax year, consumers would need to pay first, wait months for a refund, and 

be able to show a proof of purchase if audited. It would also deter low-income earners not required to file. 

Because the auction of the public’s airwaves will generate more than enough revenue to compensate consumers, it seems only fair to offer at least one rebate to each 

household. Indeed, the government’s failure to require warnings on analog TVs purchased during the past five-to-ten years will only heighten the perception among the 

middle-class that they should be compensated for a policy change that forces them 

to purchase a converter box or new digital TV. Although the 18-month transition 

in Berlin, Germany, relied on a means-tested subsidy—the government purchased 

and distributed DTA converters directly to 6,000 very low-income households—more 

affluent households also immediately received a far greater number of digital OTA 

channel selections in return for purchasing a converter or new DTV. 

If the Committee does not choose to means-test the consumer rebate, we believe 

that on balance it will be most cost-efficient to reimburse ‘‘qualified’’ retailers (Option 2 above). These retailers would need to agree to offer converters certified by 

the FCC, to limit the consumer share of the cost (e.g., a small ‘‘co-pay’’), and to provide a degree of technical support. If eligibility is limited to one rebate per household, a coupon could be mailed to each household. If possible, any rebate program 

should give consumers the choice to use it to offset the cost of a converter box, a 

new digital TV, or even a satellite dish or cable set-top box, since any of these devices will preserve access to broadcast channels and serve the policy purpose of the 

DTV transition. 

The DTV Transition Should Facilitate Both Licensed and Unlicensed 

Wireless Broadband Deployment, Particularly in Rural Areas 

New wireless networks are extending more affordable broadband access to new 

communities in every state, spurring economic development and helping to bridge 

the digital divide. Clouds of wireless connectivity now cover college campuses and 

downtown business districts—‘‘hot zones’’ that expand on the WiFi ‘‘hot spots’’ now 

offering unwired Internet connections at 18,000 locations nationwide. 4 These zones, 

in turn, are becoming clouds, extending ubiquitous broadband access to entire towns 

and counties. Commercial wireless Internet service providers (WISPs) are connecting homes, farms, and small businesses to broadband at distances of up to 30 

miles. Municipal networks—in small towns like Chaska, Minnesota, and in rural 

villages like Coffman Cove, Alaska—are blanketing under-served areas with highspeed Internet access at affordable prices. In other towns—such as Scottsburg, Indiana—public-private broadband networks have saved jobs by keeping businesses 

from moving out. And in other towns—such as Granbury, Texas, and San Mateo, 

California—these same networks serve as mobile communications systems for police 

and other public safety agencies. 

What all of these innovative broadband networks have in common is the tiny sliver of unlicensed frequencies they use to transmit signals. In fact, far more homes 

and small businesses now rely on wireless Internet services delivered over unlicensed spectrum, while very few last-mile broadband connections (and zero municipal wireless hot zones) have been deployed on licensed bands. Thousands of mostly 

rural commercial Internet service providers (WISPs), and dozens of municipalities 

and nonprofit community networks, already use the crowded 2.4 GHz unlicensed 

band to deploy wireless connections to hundreds of thousands of businesses and consumers. Unlicensed spectrum has spurred billions of dollars in economic activity, 

114 

5 In the nearby but less valuable 2–3GHz band, the ratio of licensed cellular to unlicensed 

spectrum is less than the ratio below 2 GHz, but still more than two to one. The unlicensed 

WiFi band at 2.4 GHz has 83.5 MHz of spectrum, but the licensed cellular bands, mostly at 

2.5 GHz, occupy more than 200 MHz of spectrum. 

saved jobs, and opened up new opportunities for local economic development, particularly in rural areas. 

WiFi is just the beginning of a wireless paradigm shift—a radio revolution premised on shared, unlicensed access to the airwaves that will determine if the U.S. 

will be a leader or a laggard in the next generation of Internet technologies. Like 

licensed cellular providers, who need more and better spectrum to meet the growing 

demand for wireless data services, an allocation of low-frequency spectrum for 

shared, unlicensed access will promote the deployment and lower the cost of Internet access provided by entrepreneurial WISPs and community networks. The problem is that the WiFi band (2.4 GHz) is small, uneconomical, and shared with well 

over 200 million consumer devices, from microwave ovens to cordless phones, and 

baby monitors. Opening returned (and unassigned) TV band spectrum for WISP and 

community access on an unlicensed basis will greatly stimulate broadband deployment, rural access, and growth in America’s high-tech sector. 

We recommend that Congress use the DTV transition to encourage both licensed 

and unlicensed wireless broadband networks as competitive alternatives to wireline 

cable and DSL offerings. DTV transition legislation can accomplish this in two ways: 

First, from the 60 MHz (10 channels) in the 700 MHz band now designated by 

the FCC for auction and exclusive licensing, the FCC should be directed to reallocate 20 MHz for shared, unlicensed use under Part 15 rules. Even if only 40 MHz 

is auctioned for exclusive use, this is in addition to the 90 MHz reallocated for auction next year under the Commercial Spectrum Enhancement Act signed into law 

just last December. In the low-frequency, high-penetration frequencies below 2 GHz 

(the ‘‘beachfront’’ spectrum), 26 MHz is currently allocated for unlicensed devices 

versus roughly 290 MHz for licensed cellular services.5

Second, the bill should direct the FCC to complete its pending rulemaking (Docket 

04–186) that would open unassigned TV channels below Channel 52 for unlicensed 

public access, subject to rules designed to avoid risk of harmful interference to the 

dwindling number of over-the-air DTV consumers. Even after the DTV transition, 

Channels 2 through 51–288 MHz of prime spectrum—remain designated exclusively 

for TV broadcasting. Yet only about seven TV stations are licensed to operate at full 

power in each market, on average. Even fewer stations operate in some rural markets. As former FCC Chairman Michael Powell recognized when he initiated the notice of proposed rulemaking last year, the unassigned ‘‘white space’’ can be opened, 

on a market-by-market basis, for shared, unlicensed use by operators using equipment certified by the FCC to ensure there is no interference with licensed DTV stations on nearby frequencies. 

Unfortunately, this rulemaking has drawn intense opposition from the broadcast 

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6See the Digital Opportunity Investment Trust Act, introduced in the Senate (as S. 1023) on 

May 12, 2005, by Senators Dodd (D–CT), Snowe (R–ME), Durbin (D–IL), and Burns (R–MT), 

and in the House (as H.R. 2512) on May 19, 2005, by Representatives Regula (R–OH), Markey 

(D–MA), and Gillmor (R–OH). 7See J.H. Snider, ‘‘Should DTV Must-Carry Be Expanded, Sunset, Or Preserved As-Is?’’ 

(Washington, D.C.: New America Foundation, May 2005), especially Appendix A: ‘‘A Comparison 

of European Union and U.S. Must-Carry Regulations.’’ 8The Public Interest, Public Airwaves Coalition (PIPAC), of which the New America Foundation is a member, has proposed to the FCC a quantifiable and verifiable public interest test. 

Continued 

land is used for affordable broadband and wireless innovation more broadly, we recommend that Congress adopt findings to that effect and direct the FCC to complete 

the proceeding within 6 months. 

Auction Revenue Above the ‘‘Score’’ Should Be Designated To Capitalize a 

Trust Fund for the Digital Future of Public Broadcasting and 

E-Learning Technology 

While reclaiming spectrum for public safety and advanced wireless services is critical, we urge Congress to take advantage of the resulting auction revenue windfall 

to ensure that our Nation’s public service media can thrive in this digital future. 

Public broadcasting is uniquely positioned to be a leading part of the solution to 

many of the fundamental challenges facing our society. It can harness digital technologies to expand public media services in education, homeland security, public 

health, and civic affairs that would not otherwise be available on commercial channels—and it can create wholly new and dynamic approaches over both added digital 

channels and over the Internet and other new media platforms. Nowhere is an enhanced role for public service media more vital than for early childhood learning, 

as well as for learning lifelong. America’s classrooms and homes could better boost 

academic achievement if they had ready access to the high-quality multimedia resources that are needed to engage teachers and students in information age learning. 

Over the past 6 months, I have had the honor of directing the Digital Future Initiative, a panel of prominent leaders from both inside and outside of the public 

broadcasting system, which has been meeting to consider how public broadcasting 

should reshape its role and exploit emerging digital technologies to meet critical 

public needs, particularly in education. This Digital Future Initiative, Co-Chaired 

by Jim Barksdale, the former CEO of Netscape, and Reed Hundt, former Chairman 

of the Federal Communications Commission, will issue a report by September that 

will describe why an investment in a modernized and expanded public service media 

system would be so beneficial for the nation. We hope you will consider this need 

in thinking about the value of reinvesting spectrum revenue to enhance the Nation’s 

digital future. 

Any auction of the people’s airwaves should be seen as an opportunity to invest 

in the digital future of our public media and educational institutions. As noted earlier, because the TV band auctions are likely to yield more revenue than the Congressional Budget Office will officially project, we recommend that the proceeds exceeding the CBO ‘‘score’’ be earmarked to capitalize a trust fund to finance ongoing 

investments in both educational media and e-learning content and applications. Legislation that does exactly this was introduced by two members of this Committee 

in May. Senators Snowe and Burns, along with Senators Dodd and Durbin, have 

introduced a trust fund proposal that would be funded from earmarked spectrum 

revenue—the Digital Opportunity Investment Trust (DOIT) Act. The DOIT Act calls 

for the creation of a trust to finance, among other things, the digitization of materials stored in museums and libraries, as well as research and development to improve digital educational content, media, and methods. The DOIT Act includes an 

annual 21 percent set-aside to public broadcasting entities for digital educational 

content development.6 That Act should be incorporated into the DTV transition legislation. 

Finally, while broadcasters lobby for multicast must-carry rights, they oppose any 

expansion of their public interest programming obligations. The U.S. stands apart 

from the developed world in giving commercial broadcasters free must-carry rights 

and the option to negotiate payments from cable and DBS systems (retransmission 

consent).7 Licensees should be required to use DTV’s enormously increased capacity 

to expand the coverage of diverse viewpoints and of local civic affairs and election 

contests. In exchange for their far more valuable DTV licenses, Congress could require broadcasters to air a minimum of 3 hours per week of local civic or electoral 

affairs programming.8 Studies have shown the many ways in which broadcasters 

fail to deliver meaningful coverage of local civic and electoral affairs: 

116 

For more information, visit the Campaign Legal Center’s PIPA Coalition website at: http:// 

www.ourairwaves.org/fcc/. 9See ‘‘Broadcasters ‘Black Out’ Public Affairs Programming, New Study Finds,’’ Alliance for 

Better Campaigns Press Release, October 22, 2003. Available at: http://www.better 

campaigns.org/press/release.php?ReleaseID=50. 10See ‘‘Most Local TV Newscasts Are Ignoring the 2002 Mid-Term Elections,’’ Alliance for Better Campaigns Press Release, October 16, 2002. Available at: http://www.bettercampaigns.org/ 

press/release.php?ReleaseID=37. 11See ‘‘Political Ad Spending on Television Sets New Record: $1.6 Billion,’’ Alliance for Better 

Campaigns Press Release, November 24, 2004. Available at: http://www.bettercampaigns.org/ 

press/release.php?ReleaseID=65. 12Former FCC General Counsel Henry Geller has proposed monetizing broadcasters’ public 

interest obligations in this manner. See Henry Geller and Tim Watts, ‘‘The Five Percent Solution: A Spectrum Fee to Replace the ‘Public Interest Obligations’ of Broadcasters,’’ (Washington, 

D.C.: New America Foundation, May 2002). 

• Local public affairs accounts for less than one half of 1 percent of all programming on local television stations, according to a 2003 study.9

• Elections below the Presidential level receive meager coverage. During several 

weeks leading up to the 2002 midterm elections, most newscasts on local TV 

stations contained virtually no election coverage at all.10

• While cutting campaign coverage, broadcasters are airing more—and making 

more money from—paid political advertising than ever before. In the 2004 elections, candidates, parties, and independent groups spent $1.6 billion on TV ads 

in the Nation’s 100 largest media markets—more than double the $771 million 

spent in 2000.11

We believe that like the current minimum standard for airing children’s educational programming, a license renewal processing guideline that called on stations 

to air a minimum amount of programming related to local civic issues and elections, 

under their own editorial control, would not present Constitutional problems. Alternatively, commercial broadcasters should pay an annual spectrum user fee to finance a trust fund for the digital future of public broadcasting and educational content more broadly.12

Conclusion 

Local TV broadcasting, perhaps the most profitable, legal business in America 

today, has arguably received the largest government subsidies in U.S. history. Yet, 

there is no end in sight to the digital TV transition. Every year this delay imposes 

an opportunity cost of tens of billions of dollars on taxpayers and consumers who 

are deprived of both payment for commercial use of the public airwaves, and the 

economic value that spectrum-starved wireless broadband services providers could 

provide more efficiently at low frequencies. 

We urge Congress to foreclose any further delay by setting a fixed deadline for 

the return and clearance of TV Channels 52–69. The best means to this end is a 

broad-based consumer converter box rebate that ensures all households that still 

rely on analog over-the-air reception are held harmless. The resulting certainty will 

ensure the public receives full market value from the auction of a portion of the return channels. However, we also strongly recommend that roughly one-third (20 

MHz) of the TV band spectrum reallocated for wireless services be reserved for 

shared, unlicensed wireless broadband, which is particularly important for extending affordable Internet access to rural and other under-served areas. 

Finally, we recommend that auction revenue that exceeds the CBO ‘‘score’’ be designated to capitalize a trust fund to finance the digital future of public broadcasting 

and for e-learning services, such as in the proposed Digital Opportunity Investment 

Trust legislation. 

Thank you again for this opportunity to testify. I will be most happy to respond 

to any questions, or to assist staff as the Committee develops its own solution to 

this important problem. 

The CHAIRMAN. Well, thank you very much. 

Mr. Kennedy, I think that we’ve a attrited a little bit, so we have 

lost part of your audience. But I think we should proceed now, if 

we may. 

Mr. KENNEDY. My pleasure, Senator. 

Let me explain what we have here. These look like high-tech TV 

sets. These are analog television receivers. They are flat-screen reVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
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ceivers, which makes them easy to carry over here to show you. 

But these are equivalent to the television receiver that we all have 

at home somewhere, often in that upstairs bedroom. I’ve got this receiver hooked to that $50 converter box that I 

talked about. This receiver is not hooked to the converter box. 

They’re receiving an off-the-air analog television signal through 

that rabbit-ear antenna over there. So, you can see, by that, this 

is a very similar situation to what we would have at home. 

This is Channel 4 here in Washington, D.C. I hope you can see 

it. It’s right off of that antenna, over-the-air analog broadcast. You 

can see, the picture has what we would call interference, or snow, 

in it. It’s not a very clear picture. It’s perhaps a watchable picture, 

but it’s certainly not a very good picture. 

Now I’m going to bring up the same channel that’s been passed 

through this converter box. I hope you can all see the difference. 

Senator BURNS. Is that the same station? 

Mr. KENNEDY. Same station, slightly delayed, because there’s a 

little bit of processing in the converter box. So, you’re—now, you 

wouldn’t notice this at home—you wouldn’t have the two sets next 

to each other—but there’s a slight delay. You can certainly see the 

interference here, and the interference is gone there. 

Senator BURNS. Now, I have cable on that channel in my 

house—— 

Mr. KENNEDY. You have cable. 

Senator BURNS.—in Arlington, and I get the same lines off that 

cable as you’re getting right there. 

[Laughter.] 

Mr. KENNEDY. I think the problem is, Senator—— 

Senator BURNS. I pay $47 for those lines. 

[Laughter.] 

Mr. KENNEDY. You must not be using a Motorola set-top box. 

[Laughter.] 

Mr. KENNEDY. We’ll come out and take a look at that. 

Senator DEMINT. Is this a digital signal? 

Mr. KENNEDY. This is a digital signal, where it says ‘‘converted 

over-the-air.’’ Pardon me, the converter box is taking the digital 

signal that’s being broadcast by Channel 4 today. It is formatting 

that to display it on an analog television. 

Senator DEMINT. Now, on the right, we have a digital signal—— 

Mr. KENNEDY. On the right, you have an analog signal. That’s 

today’s over-the-air television. That’s exactly what you have. 

Senator DEMINT. So, you have simulcast of analog and digital. 

Mr. KENNEDY. Yes. Yes. So, we get a cleaner picture. And then 

if I can—let me go back here. A number of TV broadcasters are 

also using their digital signal to multicast, to send more than one 

signal out to their audience. Here you can see, this is Channel 4, 

their second channel. So, not only with this converter box do you 

get a cleaner TV signal, but you get additional channels to watch. 

And, as I go through these, Channel 7, their main broadcast, Channel 7, their second signal—that’s not possible on the analog set. 

Senator DEMINT. If it was a digital-only signal, would the TV on 

the right be blank? 

Mr. KENNEDY. Yes, if the analog signal were turned off. In fact, 

that’s why—one thing we’re here to talk about today, the 15 perVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
118 

cent, roughly, of the homes with sets out there who would not be 

able to receive a digital signal, absent some sort of a converter like 

this. 

And let me just show you one other thing. Channel 26 is actually 

broadcasting four multicast channels. So, this is the second Channel 26, second channel. You can see, here is Channel 26 for kids. 

Senator DEMINT. Could they do ten channels if they wanted to? 

Mr. KENNEDY. I’m not that good of an engineer. I think there are 

about—four or five is about the limit. 

The CHAIRMAN. Is that digital-ready—is it total-digital now? This 

is—— 

Mr. KENNEDY. It’s total-digital. 

The CHAIRMAN.—digital receiver, digital signal. 

Mr. KENNEDY. Yes, the digital signal is being broadcast by the 

television station, and it’s being received by this digital receiver, 

this converter box, and turned into an analog signal. 

Senator DEMINT. I think we just saw a digital cliff. 

The CHAIRMAN. No, that’s the reverse of a cliff, because this has 

gone up. 

Senator DEMINT. But it’s going down. 

The CHAIRMAN. No, it’s—it’s a digital signal coming in—— 

Senator DEMINT. There it went. 

The CHAIRMAN.—on analog, and turned into digital. 

Mr. KENNEDY. Right. No, I’m sorry, sir. This is a digital signal 

coming in, being converted to analog so we can see it on an analog 

television. 

The CHAIRMAN. Oh, I—yes, he’s right, then. All right. I was 

wrong. 

Mr. KENNEDY. That’s it. As I said earlier, we—with a hard date 

for DTV transition, we’d have that box on the market in January 

of 2009, for $50. 

The CHAIRMAN. Ooh, that’s a wake-up call. 

Well, we do thank you very much, Mr. Kennedy. That’s interesting to see. A colleague of mine, my age, says, at the time when 

you get a digital signal on a digital-ready set, it’s like being in a 

new generation. It’s really a wonderful opportunity. 

We are at the point where we’ll ask members if they have any 

questions. 

Senator Inouye? 

STATEMENT OF HON. DANIEL K. INOUYE, 

U.S. SENATOR FROM HAWAII 

Senator INOUYE. I would like to ask Chief McEwen a question, 

if I may. If Congress establishes a hard date, how long will it take 

your organizations to build systems and acquire the equipment necessary to put the 24 megahertz of spectrum into use? 

Mr. MCEWEN. Well, that’s the heart of the issue for public safety, 

to be very honest, and I appreciate the question. 

Without a date certain, nobody will plan to use the spectrum, because they can’t get the funding that will be committed either by 

local, state, or Federal sources. And, to be very honest with you— 

I don’t want to speak for Mr. Kennedy, but we’ve been told by the 

manufacturers that they aren’t even going to begin to produce 

equipment that we could use until there is a date certain, because, 

119 

for instance, if you establish a date certain of 2008, and they started to develop equipment today for our use, that could be obsolete 

in two or 3 years, and they could develop much better equipment, 

you know, at the time that they know that this is going to be purchased. Nobody is going to purchase equipment until they can use 

it. So it’s kind of a difficult problem for us. 

So, the issue here is that if you start—to give you an example 

to try to answer your question—if you were to start to develop a 

system, if we had a date certain of today, and we started today, it 

takes about a year of planning, and licensing, and developing your 

whole plan. It takes another year of putting out a request for proposal for the equipment that you’re going to purchase, and a decision has to be made to purchase equipment. And it takes another 

year for that equipment to be purchased, or to be built, and to be 

actually put into service. So, it takes about a minimum of 3 years 

from the date we start that process. So, if you give us a date certain, we can actually begin to develop that strategy at that point 

in time when we know there is a date certain. 

Does that answer the question? 

Senator INOUYE. Yes. In other words, if we delay the hard date 

too long, we’ll be having several disasters before you’re finished. 

Mr. MCEWEN. I would say that’s very likely. I mean, that’s a 

very sad situation that could happen. I mean, no matter what you 

do today—we’ve been waiting since 1997, when the Congress told 

the FCC to give us this spectrum, so there’s been a whole series 

of years we’ve been waiting. This is an important thing for us, to 

get that date set. 

Senator INOUYE. Well, I’m certain that all of the members of the 

Committee support your efforts. We’ll have to work out some way 

to accommodate you. 

Mr. Kennedy? 

Mr. KENNEDY. Senator, thank you. I just wanted to underscore 

one point. Because the problems that Mr. McEwen talks about are 

very real problems for the public-safety community and for manufacturers, one of the things that we have done is, we have already 

implemented some of these frequencies in some of the public-safety 

systems we sell today. In other words, the frequencies we’re talking 

about here are adjacent to currently licensed and used frequencies. 

And we’ve taken the opportunity to load them into some of our 

walkie-talkies, our police radios. There are about 100,000 out there 

in service now. They can’t be turned on, they can’t be used in these 

frequencies, because of the issues with DTV. But we have tried to 

get, sort of, a jumpstart on getting the right kind of radios into the 

public-safety marketplace. 

Senator INOUYE. Mr. Kennedy, since you’re on there, you said 

that the converter boxes will be available. When will these boxes 

be available? 

Mr. KENNEDY. I said January of 2009. We need, again, the certainty of a hard date to really commit to the program. 

Senator INOUYE. That’s providing the hard date is 2006? 

Mr. KENNEDY. I’m assuming 2008. 

Senator INOUYE. Should consumers have the ability to get subsidized converter boxes? 

120 

Mr. KENNEDY. You know, I think that’s a question, really, for the 

Committee. The box is not that complicated to build. It—you know, 

it’s—it could be built by other manufacturers also. It isn’t, in a 

sense, the—from our perspective, the business of selling the box is 

not really the goal here. Our goal is to try to help free up all of 

the radio spectrum. 

Senator INOUYE. I’d like to follow up on a question that the 

Chairman asked. Are there any U.S. manufacturers of TV sets? 

Mr. SHAPIRO. I assume that’s for me. Yes, there are. In fact, 

there is significant manufacturing which occurs in the United 

States, of projection and cathode-ray tubes in Pennsylvania and in 

California, I believe, and in Arkansas, as well. And I can follow up 

in writing. 

There’s a lot of talk, though. The broadcasters have said foreign 

manufacturers—they have certainly done a good job of trying to 

create that impression. 

We have almost two million jobs in the United States connected 

with the consumer-electronics industry. And, to the extent that 

manufacturing has shifted abroad, it’s shifted from Mexico to 

China, it hasn’t shifted from the U.S. out. And these are, you know, 

very low-scale factory jobs. 

The reality is, there’s a tremendous amount that’s done in the 

United States with chip development, with designs, with sophisticated displays of the entire range of the consumer electronics industry. And certainly there’s a tremendous amount of manufacturing of TV sets that occurs abroad. 

The reality is, the entire industry is one which is multinational 

and is pulling along a good portion of the U.S. economy, and that 

goes from TVs and displays to all sorts of devices. The average 

American family now owns 25 consumer electronics products. 

These are devices which are making a huge difference in our productivity, in our ability to telework, and everything else. 

So, coloring this as an issue of overseas production is very deceptive, because, again, it was from Mexico to China, to a large extent. 

But manufacturing occurs all over the world, and especially if you 

look at components and chips, a lot of that occurs in the United 

States. 

Senator INOUYE. My time is up now. 

The CHAIRMAN. Thank you very much. 

Senator Burns? 

STATEMENT OF HON. CONRAD BURNS, 

U.S. SENATOR FROM MONTANA 

Senator BURNS. Thank you. 

Just for the record, we’ve got all kinds of spectrum out there. 

Why, this 700 megahertz, does it become very important? What is 

it—anybody, anybody answer that. This is a technical question, I 

know. Why does that work, and not the 600, or the 800, or whatever? Give me an idea. 

Mr. MCEWEN. Public safety is in multiple bands. We go into the 

30 toP megahertz band, we’re in the 150 megahertz band, we’re in 

the 450, we’re in 700 to 800. And we’ve got some new 4.9 gigahertz. 

So, we’re all over the place. And the main reason is that spectrum 

is—as you know, is a valuable commodity, and there isn’t enough 

121 

spectrum in any one place to allocate it without displacing other 

people for public-safety’s needs. 

The Congress and the FCC, in 1996, made the decision that, because of the way this—this analog conversion to digital was going 

to take place, that it was an opportunity for public safety to get the 

additional spectrum that they needed. That’s why that particular 

band. There isn’t any spectrum currently available in those other 

bands that you’re suggesting. So, that’s why it’s important to us. 

Senator BURNS. In other words, you chose to displace the broadcast industry—— 

Mr. MCEWEN. No. 

Senator BURNS. What? 

Mr. MCEWEN. No, we didn’t choose it. The FCC and the Congress 

knew that this spectrum was going to be available when the conversion from analog—I mean, if you understand, when you go from 

an analog channel this wide, down to digital channels this wide, 

that left spectrum. And the decision was made that this was spectrum that would be good for the use of public safety. And it’s very 

good for mobile-type communications. 

Senator BURNS. But it does not contain any other quality, other 

than that, then there’s just a big chunk of it. 

Mr. MCEWEN. And it’s very good for mobile-type use, is the purpose for us. It’s very—— 

Senator BURNS. We’ve somebody else who wants to talk. Yes? 

Yes? 

Mr. CALABRESE. Senator, the—when you get below—it’s very important to get below one gigahertz, for broadband. I mean, I’m sure 

there are reasons, for public safety, but I’m familiar with wireless 

broadband. Vulcan Ventures and other firms have done studies 

that show that the deployment cost for a wireless broadband network drops by a factor of at least three when you compare, for example, deploying broadband in the WiFi band, which is up, say, at 

2.4 gigahertz, compared to being below one gigahertz. 

So, for—one reason is, then, you can go out and build a rural 

broadband network at one-third the cost if you get into the TV 

band. And the other reason we look at the TV band is because, you 

know, the—even after the DTV transition, broadcasting will have 

49 channels, 288 megahertz of that prime spectrum, and yet there’s 

only an average of seven full-power stations operating in each of 

the Nation’s 210 markets. So, even though there might be 20 in 

New York or Los Angeles, when you’re in Alaska or some other 

states there may only be four, or five, or six, and yet we’re wasting 

all of that prime spectrum that could really lower the cost of rural 

broadband deployment. 

Senator BURNS. Yes? 

Mr. TOWNSEND. Senator, is this a trick question? 

Senator BURNS. Sort of. 

Mr. TOWNSEND. OK, I’ll try it. 

Senator BURNS. Throw me a tricky answer. 

[Laughter.] 

Mr. TOWNSEND. We’ve operated at many different frequencies— 

at 1900, 800, 700—as you know, I think—that’s why I asked you 

that question—for every 700 megahertz of spectrum that you go 

up—from 0 to 700, 700 to 1400, 1400 to 2100—the distance that 

122 

that signal can travel gets cut in half. So—I mean, just generally; 

it’s not exactly right, but that’s generally it—so, a 700 megahertz 

signal can travel about two and a half times as far as a 1900 PCS 

signal. That’s a big deal. It means that you can cover 1,000 square 

miles with a single cell site, compared to four cell sites at 1900. So, 

the cost of deploying a nationwide network, particularly in rural 

areas, is dramatically cheaper at 700. 

The second advantage is that the 700 megahertz signal, kind of, 

goes straight. So, it goes right through walls, and buildings, and 

everything else. Whereas, the 1900 signal has that old sine curve 

you saw in math class. And when it hits a wall, it bounces off. So, 

the 1900 signals can’t get into buildings as well. 

Mr. SHAPIRO. And the reason that’s important is for public safety. For example, the firemen that were in the World Trade Center 

on September 11th, they could have gotten the signal with a broadcast signal. With other higher frequencies, it doesn’t go through the 

concrete. The broadcasters had the spectrum about 50 years ago, 

when science was a lot less sophisticated, and it’s huge. This six 

megahertz is just huge for each broadcaster. And what the transition’s actually doing is, they’re keeping essentially the same 

amount of spectrum they had, in terms of their ability to send out 

a signal, but it’s just being used more efficiently, and the holes in 

the Swiss cheese are being transferred over, back to the public for 

other purposes. 

Senator BURNS. OK. Now, I have a—now, should it be—anybody 

who wants to answer this—in other words, you’re asking Congress 

to set policy, basically. So, you say it’s insignificant that we have 

only 11 percent of the people out there who depend on over-the-air 

broadcast, who do that now. And you said it was not necessary, for 

economic problem—economic reasons. Is that correct, Gary? 

Mr. SHAPIRO. Yes. 

Senator BURNS. OK. We are going to—we are going to, then, set 

policy that tells America, from this point on—from 2008, the end 

of 2008—that all Americans will have to pay for their news, their 

sports, their entertainment—— 

Mr. SHAPIRO. No. That’s not—— 

Senator BURNS.—that used to come over—— 

Mr. SHAPIRO. Senator, with respect, that’s not what we’re saying. 

The world has dramatically changed. Americans now have the 

choice of six or seven different ways of getting information into 

their home—broadcast, cable, cellular—the broadcast one is free; 

there are other ones that are relatively free, also. WiFi is almost 

free now. But the fact is, if only one out of ten Americans are using 

over-the-air broadcasts to get a signal, those Americans—you’re 

looking at some types of policies which would allow those Americans to have alternatives, either through some types of rebate, or 

the ability to get a converter. The fact is that one out of four American families buys a new TV set every year anyhow. As we go on 

five or 10 years from now, that will make a difference. The costs 

will go down so much, it would be incorporated. 

What I’m saying is, look at one future of the TV set which is 

barely used today, and Congress is going to give three or 4 years’ 

notice to American consumers that that will be turned off. Just the 

way people buy computers today, they don’t expect them to be 

123 

working in five or 10 years. This is a feature. The fact is, most TV 

sets are used for cable, satellite, DVD, games. The over-the-air 

broadcast component is barely used today. And, yes, it’s significant 

to the people that use it, but if you consider the alternatives which 

would allow those Americans that want to go out and get that converter box—subsidized, low-cost, rebate, whatever it is—the ability 

to do that, I predict that that will be a very small number of Americans. 

It happened in Berlin. Berlin went over to digital television, and 

the government was absolutely shocked that, of all the Berlin citizens who were eligible to go get this free thing, only a few thousand out of the tens of thousands who were eligible actually went 

and got it. They ended up with a lot of converter boxes they 

couldn’t get rid of because the Germans basically wanted—didn’t 

care about over-the-air. 

Senator BURNS. Anybody else want to comment on that? 

Mr. KIMMELMAN. Senator Burns, if I could just say, quickly, I’m 

pretty stunned at Mr. Shapiro’s cavalier attitude about this. I 

mean, I’m sure—they sell a lot of electronic equipment. They make 

money doing it. I understand they want to sell more. But, by our 

count, there are 80 million sets out there that could go black that 

people are using today, not for games. 

Now, I’m not trying to scare anybody. A $50 converter box would 

be a wonderful thing to come to the market, and we want public 

safety to be taken care of, but we need to do this responsibly. These 

are TV sets that people are actually using, they say they’re using. 

Now, if the consumer electronics industry thinks there are fewer, 

I urge you to have them indemnify and cover the cost of the $50 

box if they’re so sure. I don’t believe their numbers are right. But, 

more importantly, these are sets that work today. Why should people have to pay just to keep those sets working? If they’re going 

to—if they want to buy a digital TV, if they want to buy a set-top 

box, if they want to buy anything, wonderful, we’re all for it. But 

if they just want to keep their television sets working to get overthe-air signals, why should they have to pay? 

Senator BURNS. You want to respond to that, Mike? 

Mr. KENNEDY. Yes, Senator. 

The CHAIRMAN. This will be the last response. 

Senator BURNS. OK. 

Mr. KENNEDY. OK. Senator, all I wanted to add is that this converter box allows television to continue to work. It’s sort of a future-proof on your analog TV set. So, we are not here asking the 

Congress to turn off television. Absolutely not. We’re asking the 

Congress to make available spectrum for public safety and other, 

sort of, great growth wireless services in the United States. And 

we’re demonstrating a solution that basically takes care of the individual viewers at—the few remaining viewers that are still looking 

at over-the-air broadcasts. So—— 

Senator BURNS. OK. 

Thank you. 

The CHAIRMAN. Yes, sir. 

Senator Ensign? 

124 

STATEMENT OF HON. JOHN ENSIGN, 

U.S. SENATOR FROM NEVADA 

Senator ENSIGN. Thank you, Mr. Chairman. 

I want to just address a couple of things that—Mr. Kimmelman, 

you talked about holding harmless the consumer. But, you know, 

in all of the consumers—the fact is, in this new world with this 

spectrum freed up, the spectrum is going to get more, not less. 

There are going to be so many more services. You talk about, you 

know, the people in Alaska and Montana that, right now, cannot 

get broadband. OK? And that digital divide is going to get wider 

without this spectrum being freed up. The consumer is going to get 

more. Those televisions are not going to go black. Those televisions 

just need to have converters, and the converters are—the technology is very simple technology. The $50 number—you know, I 

can’t tell you how many different manufactures I’ve heard from 

that that $50 number is a very conservative number. It could be 

even as low as $35–$40. The fact that—how many of our households today have computers? They pay a lot more than $35–$40, 

and they expect those computers to last three, maybe four—and 

if—some people will maybe go five or 6 years if they’re real antiquated, but, basically, they’re thinking about turning those things 

over that often. A $50, you know, converter box is really not a lot. 

And, for those—and I believe, you know, we can have some kind 

of a program—I’m not sure exactly what it will look like now—for 

those low-income people that want to convert over, or that need a 

little subsidy, or say they want a subsidy, put it out there. And I 

think that—I agree, I think the same thing will happen as happened in Germany. I think you put it out there and very few people 

will take advantage of it. But, for those who need the satisfaction 

of that, the policymakers need that satisfaction out there, put it out 

there. I don’t have a problem with that. That’s a compromise that 

we can make. 

But, you know, for people like us, here at this table, or you, or 

the people in the audience here, we don’t need a subsidy for a little 

converter box for those televisions that are analog. I have eight 

TVs in my house, in every little room, and every one of those are 

analog. OK? Now, I plan on—you know, soon, a couple of the main 

TVs—you know, going to the consumer electronics show and buying 

some things. But—— 

[Laughter.] 

Mr. SHAPIRO. We appreciate that. 

Senator ENSIGN. But, you know, I mean, I—there’s no way I 

should be getting a subsidy, or people that can afford it. It’s not 

an expense that’s of any significance. The benefits, though, are 

huge. 

I want to address the cost aspect—not the cost, but the revenue 

aspect of the spectrum. Mr. Townsend, you’ve been quoted before. 

The CBO, I think—Mr. Chairman, if I’m not incorrect, CBO estimated $10 billion on the auction. Is that about right? And that was 

interesting—about the date is—during our listening session, as 

some of the people—you know, the CBO was saying that the sooner 

you do it, the less money you raise—during the listening session, 

some of the people made the argument that the later you do it, the 

less money that is raised because of compression technology. Mr. 

125 

Townsend, could you, one, give us—for the hard date that’s been 

talked about today, give us what your estimate is, versus the $10 

million the CBO has estimated, but also talk about, whether it’s 

sooner or whether it’s later, what you think would happen to the 

revenue. I mean, I think we should listen to people that have actually been out there bidding on this auction. 

Mr. TOWNSEND. Our estimate was $20- to $30 billion sometime 

in the next 2 years. That was based on comparable transactions. 

We went and looked at what other people are buying and selling 

spectrum at 1900, which I don’t think is as good as 700. That’s 

what they’re paying today. In terms of, is it more valuable—— 

The CHAIRMAN. What was the date, now? 

Mr. TOWNSEND. I didn’t give a specific date. It was, kind of—this 

is what 1900 is selling for right now. I think if the date—this is 

a tough question, because we would like to buy that right now. And 

I think the companies we’ve talked to would like to buy it right 

now. So, as the time goes on, hopefully they’ll be eager to buy it, 

as well in the future as they are in the past. I don’t think pushing 

it out too far is a good idea. 

Senator ENSIGN. So, in other words, you don’t think that it’ll be 

more valuable into the future, and there’s a chance it could be less 

valuable. 

Mr. TOWNSEND. That’s correct. 

Senator ENSIGN. OK. 

The idea that—I think, that needs to be emphasized today, that 

all—virtually across the board, from what we’ve heard from people, 

is a hard date. I mean, that—I don’t know if anybody else is watching this thing, or listening. That’s significant news today, that virtually everybody that’s testified here believes that the Nation needs 

to go to a hard date, from first responders, to the manufacturers 

to the broadcasters, cable. Virtually everybody has agreed that a 

hard date—it’s just some of the issues on how do we get to that 

hard date, how much of a subsidy, protecting the consumers—what 

are the other issues involved—the must-carry and all of that, some 

of the details that we can work out, but the significance, I think, 

of the hearing, and, I think, why it’s so significant that you’ve held 

these hearings, Mr. Chairman and Senator Inouye, is that we have 

now a hard date to go toward, and work out the details in the 

meantime. So, I think it’s very significant, what has happened here 

today. 

Thank you, Mr. Chairman. 

Mr. MCEWEN. Senator—could I just make a comment, Mr. Chairman? 

The CHAIRMAN. Yes, sir. 

Mr. MCEWEN. Your sheriff, Bill Young, in Las Vegas, is in a— 

as you know, that’s a rapidly growing metropolitan area—he is facing this rapidly growing population and has increasing congestion 

in his radio channels there. His is one of the places that is looking 

to use 700. It’s a good example of what we’re faced with around the 

country. I just wanted to make that point. 

The CHAIRMAN. Very good. 

Senator Rockefeller? No, wait. Senator DeMint’s first. 

Senator DeMint? Pardon me. 

126 

STATEMENT OF HON. JIM DEMINT, 

U.S. SENATOR FROM SOUTH CAROLINA 

Senator DEMINT. Thank you, Mr. Chairman. 

I’ve been trying to determine the winners and losers in this transition, and it seems like the complainers are on the consumer side, 

Mr. Kimmelman, the broadcasters. And, as an old marketing guy, 

the first thing that comes to my mind as I listen to all of this, the 

digital transition could put the broadcasters back in business. 

What I just saw here this morning—and you sitting at home with 

those rabbit ears, and you’re getting three or four lousy signals, 

like Senator Burns gets from his cable, somehow. 

[Laughter.] 

Senator DEMINT. But, with the same rabbit ears, the same old 

analog TV, now, with broadcasters—with the ability to broadcast 

four or five, and probably a lot more, stations, you could sit at 

home with 20 or 30 stations on your old analog with your rabbit 

ears with as good a signal as anyone else could get. And people like 

me could say, ‘‘Why in the world am I going to pay for cable?’’ Then 

we’d make the cable people sharpen their pencils in the DIRECTV. 

This seems like one of the greatest opportunities for consumers 

that we could possibly have. Instead of me paying $50 a month, I 

could pay one time for a $50 converter and get free television with 

20 or 30 stations. It would put the national broadcasters back in 

business, instead of spending millions on one channel that they 

send to their franchisees, the franchisees would become much more 

valuable. I just can’t imagine that the folks who are very much 

thinking they’re on the losing end were the ones who will actually 

be in the driver’s seat with this transition. 

So, I appreciate the demonstration today. And if anything’s 

wrong with my logic, Mr. Kimmelman or any of the rest of you, 

please let me know. But I think what we’ve heard today, Mr. 

Chairman, it’s time to just do it and set a date certain, and get this 

thing done. And I think the market will determine the rest. 

I yield back. 

The CHAIRMAN. Very good. Thank you. 

Now Senator Rockefeller? 

STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 

U.S. SENATOR FROM WEST VIRGINIA 

Senator ROCKEFELLER. Thank you, Mr. Chairman. 

Mr. Kennedy, Mr. McEwen, I would like to ask you this question 

together with Mr. Kimmelman. After 9/11, the world changed, and 

everybody says that happily. And I find a certain kind of awkwardness in our discussion of the date certain by which we have to 

produce this thing, which will allow first responders, for example, 

to be able to get what they need in order to haul people out of the 

tragedies, or a series of tragedies, which is almost certainly coming, 

and could very well come before the date. 

Now, the question—my question is this, and it’s not a particularly friendly one, but it bothers me a lot. Another form of national 

security in this country is our dependence upon foreign oil. Americans are uniquely geared not to be able to address that problem. 

Toyota Motor Companies, which is the largest corporation in the 

world, I think, they decided that they were going to address the 

127 

problem of energy efficiency in cars. And they’ve done it through 

the introduction of hybrid engines, and they’re going to go on from 

there. 

Now, there wasn’t any law in this country that said that people 

were going to use hybrid engines, or that by a date certain we had 

to be using hybrid engines, but they started out cautiously, and 

they didn’t introduce that many of them, and now the demand is 

so high that it takes a year to get one of these Toyota Prius, which 

are extraordinary vehicles. 

Now, there’s no—as far as I know, there’s no date. They usually 

come in through California, which is more receptive to these 

things. And the rest of us learn. 

My question is, Why is it that—a company like Motorola, that 

the American industry, which has direct response to the people you 

represent, Mr. McEwen, that they have to be given a date certain 

in order to do something which they know darn well is in the national interest? And the reason they have to be given a date certain, I think, is because otherwise they say, ‘‘Well, we’re not sure 

people would buy our product.’’ Well, if this country is under 

siege—and I happen to think that it is, and I happen to think that 

most thinking people think that it is, and that there are going to 

be a variety of things happening, we’re going to really need—we’re 

going to—your folks, Mr. McEwen, are going to need this capacity. 

So, philosophically, would you, Mr. Kennedy, address the concept—and you, Mr. Kimmelman, address the concept—of requiring—and I’m all for a date certain, but how do I know that it can’t 

be 2008? How do I know it can’t be 2007? I mean, American industry can respond to anything in the world. And do you have to have 

a careful roadmap laid out for you, exactly how many people would 

buy it, in what states, and what would be the level of profit, and 

what would be the level of purchase? 

I’m made very uncomfortable by this. We’re talking strictly national security here. And I think when national security is talked 

about, the Congress does all kinds of extraordinary things, and so 

does private industry. They rise to the occasion. This somehow 

seems to separate itself because it gets into spectrum, and it has 

a more, sort of, cerebral context to it; and, therefore, we don’t treat 

it in the same way. But, in my judgment, it gets right at the heart 

of the matter of protecting the American people. 

Mr. KENNEDY. Well, Senator, thank you. 

I mentioned earlier that—I mean, we certainly, very much, appreciate the concern over security. We are the largest communications supplier to the first-responder community, I believe. We’ve 

taken some risk ourselves. I mentioned earlier that we have already taken our own risk to put some of these frequencies in systems we’re selling today. That’s an effort to lower the cost for our 

first-responder customers in the future. We take the risk that we 

will never be able to activate those frequencies unless we have a 

hard date, or we clear the band. 

In terms of the converter box, we need about 12 or 18 months 

to gear up production of that box. We would be selling into a diminishing market. You’ve heard Mr. Shapiro talk today about—every 

year there are more digital televisions in the market and fewer 

analog, and every year—there’s certainly some question about exVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
128 

actly what the number is, but every year there are fewer people 

watching over-the-air broadcasts. 

So, basically, we are not—when we talk about this converter box, 

it’s not an investment in a future business; it’s actually an investment in something that we believe would help make the spectrum 

available for first responders and for others. 

So, it—I guess that I would have to say that we’re—I think we’re 

doing what we can and should do here, by being here, by showing 

you this box. 

Senator ROCKEFELLER. Mr. Kimmelman? 

Mr. KIMMELMAN. Yes, Senator Rockefeller, I think for national 

security the American people would pay higher taxes, I think they 

would support every effort to enhance our public safety. What you 

are hearing, though, is that the market hasn’t developed. Out of 

more than 20 million sets sold last year, only a few million were 

digital sets. They’re expensive, and not as many people are buying 

them. People are still buying analog sets, day-in and day-out, 

today. It’s part of the problem. 

So, I think an orderly transition may be helpful here, because 

spectrum is used in different ways. Your cell phone can’t work with 

Senator McCain’s provider, probably, and vice versa. I mean, we’ve 

got—I’ve got an open market that has allowed for multiple uses 

and standards, and the question is, How many sets do you want 

people to have to buy? The benefit here is that no one should have 

to pay higher taxes, no one should have to pay more, because you 

are—you heard, 10 billion—you heard, as much as $30 billion could 

come in from auctioning this off in an orderly way, hopefully to 

promote more competition and diversity in the marketplace. So, 

there is a way to do this that enhances public safety, if done appropriately. 

Mr. CALABRESE. Senator, if I could make one comment, which is 

that—I wasn’t planning to talk on this, but I do believe it’s possible 

to clear the channels for public safety ahead of the rest. You know, 

I mentioned earlier that there’s only—out of the Nation’s 210 local 

TV markets, there are only 15—on average, 15 high-power TV 

channels operating on any one of those channels. But on the publicsafety channels—63, 64, 68, 69—there are far less than that, between four and ten stations operating on those channels. 

And so, the DTV transition does not necessarily need to be simultaneous in every market nationwide. I would think you could have 

a rolling transition, where you clear those—clear the stations that 

are operating on those four channels in the markets where they’re 

located. In other words, do the DTV transition in those markets 

first. It may mean a more expensive converter box, but that may 

be a price to pay. 

Senator ROCKEFELLER. Thank you. 

The CHAIRMAN. Thank you very much. 

Mr. TOWNSEND. Could I just give you a quick answer, from the 

commercial side? It’s different from what these guys are saying. 

That was the question I asked, How come we can’t do this faster? 

And the answer I get from commercial manufacturers of wireless 

broadband equipment is, you give them a date, they can have this 

stuff ready in 12 months. When I—if we were to get the broadcasters in here and give them truth serum, I think they would tell 

129 

you they could do it in 18 months. So, if you guys set a date, my 

guess is—and you wanted to crack the whip—you could have this 

done in 18 months. 

The CHAIRMAN. Senator McCain? 

STATEMENT OF HON. JOHN MCCAIN, 

U.S. SENATOR FROM ARIZONA 

Senator MCCAIN. Thank you, Mr. Chairman. 

And, Chief McEwen, earlier today Telemundo said they’d be 

ready to hand over its broadcast spectrum tomorrow. What’s the 

earliest date public safety would be prepared to use that spectrum? 

Mr. MCEWEN. We would begin the planning immediately. If you 

gave us a date certain of tomorrow, as I already have answered 

earlier for Senator Inouye, the—it takes us about 3 years. First of 

all, we need to get the funding. And so, we need that date—— 

Senator MCCAIN. Let’s assume you get the funding and the date. 

How long does it take you? 

Mr. MCEWEN. If I have the funding and date today, it takes 

about 2 years before you can actually implement, turn on the system—if I had all the planning done and the funding done, and the 

funding committed. So, it’s not a quick thing. It doesn’t happen 

quickly. 

Senator MCCAIN. Mr. Kimmelman, you talked about the need for 

Congress to compensate over-the-air viewers for the need to buy 

additional equipment—in other words, a set-top box of some kind. 

Why do you believe the government should compensate the consumers and not broadcasters or other industries? Although I think 

the broadcasters may have been amply compensated with free spectrum, but—— 

[Laughter.] 

Senator MCCAIN. Go ahead. 

Mr. KIMMELMAN. Senator McCain, are you suggesting we should 

compensate the broadcasters? 

[Laughter.] 

Mr. KIMMELMAN. Well, I mean, these are dislocation costs. And 

there is precedent in law, and you have established it before, where 

there’s dislocation as you rearrange uses of spectrum, that you 

compensate. In this case, it is not the broadcasters who are 

harmed. They are getting a very valuable asset for much less, and 

possibly as much as six stations’ worth of capacity for every one 

they had in the past. That’s an awfully valuable—— 

Senator MCCAIN. How much would it cost if we wanted to provide set-top boxes for—first of all, for every household, and then for 

every television set? 

Mr. KIMMELMAN. By our estimates, based on our surveying, 

you’re talking $2–$3.5 billion out of the $10–$30 billion from spectrum auctions, is what it would take to take care of everybody. And 

let me add that it’s not just compensation. Senator Rockefeller 

raised the issue of public safety. If a cable system goes out once 

you’ve gone digital, and you’re getting your broadcast signals 

digitally, and there are still analog sets out there—Senator Vitter 

raised it before—how do people know about it? How do they find 

out? It may be valuable to keep one analog set in most households, 

with one of these set-top boxes, so that you’ll be able to find out 

130 

about disasters and what steps to take, whether they be from outside forces or natural disasters. 

So, there is a security—a national security reason, as well, to 

think about making sure consumers can have access to communications over-the-air. 

Senator MCCAIN. If you noticed—if somebody has told—if you’ve 

got an over-the-air television set that’s not connected to your cable 

or satellite in your home, and we’re going to give you a set-top box, 

are you’re going to get a run on over-the-air television sets bought? 

Mr. KIMMELMAN. I seriously doubt it, Senator McCain. I think 

that—I mean, people are buying what pleases them. People are 

buying digital boxes, expensive boxes, if they like them. They’re 

buying very big sets. Some people are buying small ones. And some 

people will hold them. I recognize that people buy sets all the time. 

And Senator Ensign raised it. We’re for people buying whatever 

they want. But a lot of people hold their sets and use them for five, 

ten, 15, even 20 years. And so, even if they’re buying new ones, 

they’re keeping the old ones. 

Senator MCCAIN. Is part of your argument that we should buy 

the set-top boxes because it’s—there are a lot of low-income households who can’t afford to subscribe to cable or satellite? Is that part 

of your rationale? 

Mr. KIMMELMAN. Absolutely, Senator McCain. Of the 16 million 

who get over-the-air television only, the GAO estimates about—at 

least 40 percent of them are lower-income. We heard this morning 

that there is a large percentage of Hispanic households who rely 

on over-the-air. A lot of people with limited means still rely on 

over-the-air television. 

Senator MCCAIN. Mr. Townsend, in your testimony you discussed 

Aloha’s plan to bring wireless broadband to rural areas, including 

Arizona. There has been some speculation that Aloha may flip 

these licenses to wireless carriers once a firm date is set. Is that— 

can you comment on such speculation? 

Mr. TOWNSEND. Well, nobody’s called me and made us any offers. 

Senator MCCAIN. I asked you if you would contemplate selling. 

It’s very valuable stuff you’ve got. 

Mr. TOWNSEND. I have to speak as the CEO of our company. I 

think we believe this stuff is about the best spectrum you can have 

for broadband that’s available. We plan on deploying wireless 

broadband over the next few years. If somebody came and offered 

us eight gazillion dollars, I’d have to ask our investors what they 

want to do. 

Senator MCCAIN. Mr. Kennedy, what’s Motorola doing to ensure 

that public-safety equipment is interoperable—not only interoperable with other Motorola equipment, but also with competitors’ 

equipment? 

Mr. KENNEDY. Well, Senator, we’re building equipment to a 

standard called P–25. That is a federally-recognized standard. It’s 

a publicly available standard. A number of other manufacturers 

build to that standard, also. So, we do have interoperability out 

there in the marketplace. 

Senator MCCAIN. Mr. Kimmelman, how many times have we had 

a date certain? 

131 

Mr. KIMMELMAN. Quite a few. And one of my greatest fears, Senator McCain, is that even if you move forward, in budget reconciliation, with a date certain, 2 years from now we could be here again 

with a date certain, and things not having progressed far enough 

and you wondering whether you need to extend that date. And that 

would not be good for the American people. 

Senator MCCAIN. If history holds true, we’ll be here 2 years later. 

I thank you, Mr. Chairman. I don’t mean to be so cynical in 

my—— 

The CHAIRMAN. Well, thank you very much. It’s been a very informative hearing, so far. 

Mr. Shapiro, I want to get back to this TV-set question. Now, I 

was told, categorically, there are no television sets manufactured 

ready for sale in the United States, totally. Now, you say that 

there’s a large percentage. Aren’t you telling us that the components—that consumer electronics are added to some of these boxes? 

Are you really producing, from ground up, more than half of the 

television sets in this country? 

Mr. SHAPIRO. I didn’t mean to imply that, Senator. I don’t believe 

we are. As I indicated, the manufacturing has shifted rapidly from 

Mexico to China. I think the Mexicans are very upset about that. 

But the fact is that some of the chips in some TV sets are made 

in the U.S. And I’d be happy to follow specifically, after this hearing, with details. 

The CHAIRMAN. It’s very important, because I think we’re seeing 

something develop here this afternoon that I didn’t anticipate, and 

I think that Senator DeMint has a point about the set-top boxes. 

Is anyone manufacturing set-top boxes in this country today? 

Mr. SHAPIRO. Well, there are two major producers of set-top 

boxes: Motorola and Scientific Atlanta, two U.S. companies. And, 

indeed, Motorola is one of the patent-holders, I believe, of the specific ATSC standard, that it would be part of, not only every settop box, but everything having to do with HDTV getting that overthe-air signal. 

The CHAIRMAN. What’s the production on your line, then, Mr. 

Kennedy? 

Mr. KENNEDY. Well, that’s right. I don’t have that figure available. I would just comment. Manufacturing—unfortunately, there’s 

no easy, simple answer here. As Mr. Shapiro said earlier, it’s a 

complicated answer. I mean, the design and development is often 

done in the United States. 

The CHAIRMAN. You built this box, didn’t you? 

Mr. KENNEDY. Yes, we did. Yes. Yes. 

The CHAIRMAN. What does it cost? 

Mr. KENNEDY. We can sell it for $50. It costs something less than 

that. Again, I don’t have that at my fingertips. 

The CHAIRMAN. You know, I’ve got a place up in Alaska. We’re 

there about 12 nights a year. And I’m paying twice the cost of the 

set-top box now just to keep that thing on when I’m not there. I’d 

love to have a couple of set-top boxes. 

I think Senator DeMint’s got a point—we may have missed that 

point, and it’s a very good one—that many people may like to convert back to over-the-air if they had the set-top boxes. I wish you 

could tell us what the production capability is. Suppose we picked 

132 

Mr. McEwen’s date, 2 years, and said, you know, it’s a firm, absolute date, it’s going to take two-thirds to change it, or something 

like that. Now, are there going to be boxes available? 

Mr. KENNEDY. Sure. 

The CHAIRMAN. When are they going to be available? 

Mr. KENNEDY. Sure. We need 12 to 18 months to gear up a production run sufficient to meet the demand that we see out there 

now. Now, if some of the Senators are right, and people start to 

shift back to over-the-air television, that would create more demand for the product. But when we look at the number of sets that 

are out there right now—the number I have is actually 20 million 

sets—when we look at those sets, we’d need 12 to 18 months to 

gear up in time to meet that. 

The CHAIRMAN. Well, we’re going to give a transcript of this 

hearing to CBO and ask them to review their past findings, in 

terms of the amount that’s going to come in from spectrum. Mr. 

Townsend, you may get that call, after all. 

But I do think, if you’re right, Mr. Townsend, and Senator 

DeMint has a point, we ought to consider listening to Senator 

McCain even more and bringing the date closer, rather than taking 

it out. We’re taking it out a little bit, primarily because of revenue. 

We had to have the revenue. We’re mandated to bring in $4.8 billion, in this bill. So, we have to be sure we get at least that much. 

Now, I think some of you ought to give us some idea about how 

to help on that. 

I do worry a little bit, though, about—again, about the problem 

of those people who are out there who cannot afford the boxes. And 

that’s added onto that $4.8 billion. It has to be +$4.8 billion in 

order to—how much those boxes will cost, as I understand it. So, 

I do believe we have the basis for change in this bill, and—— 

You had a question that you wanted to ask, Senator Burns, is 

that right? 

Senator BURNS. I just had one question. Can we do the same 

thing—sorry, I didn’t have my thing—dealing with translators? 

Mr. KENNEDY. Yes, translators would just be broadcasting an 

over-the-air analog signal, so I think the same box would work 

with translators. 

Senator BURNS. OK. 

The CHAIRMAN. Now, let me go back to one thing that bothered 

me this morning. And I think he’s doing a fine job for his association. Mr. McSlarrow, Kyle, said they preferred to downgrade the 

signal when it came in so that the people who were using analog 

sets on their system could get the over-the-air broadcasting on the 

existing sets. Now, is there anyone manufacturing a box to go the 

other direction? Is that possible? Could I have an analog set and 

buy a box that would convert it up to the digital signal? 

Mr. SHAPIRO. You really need the digital TV set, to appreciate 

that. An analog set would only be as good as an analog set can be. 

And, as was demonstrated, almost anything digital is better, but 

you always have—a system is only as strong as its weakest component, and today the weakest component would be the analog picture. 

The CHAIRMAN. But I can’t buy a box to put on my set to pick 

up—they’re going to be broadcasting over-the-air digital, now. I 

133 

can’t use that to go up, though, to that set. I can only still convert 

it back to analog for me for my set. Is that right? 

Mr. SHAPIRO. Yes. Right. 

The CHAIRMAN. It’s not technically possible to go the other way? 

Mr. KENNEDY. Senator, what this box does is, it takes the overthe-air digital signal and converts it to an analog signal so it can 

be displayed on a conventional analog television set. 

The CHAIRMAN. Right. 

Mr. KENNEDY. I’m not aware of how you would go—in a sense, 

do that in the other direction. 

Senator BURNS. You’ve already got a digital set, so you don’t 

have to convert it the other way, right? 

The CHAIRMAN. No, I’ve got an analog set, but I want the digital 

signal, and not just—— 

Senator BURNS. You’re going to get it. 

The CHAIRMAN. I’m only going to get the converted signal on analog, as I understand it. Correct me if I’m wrong, Mr. Shapiro. Am 

I wrong? 

Mr. SHAPIRO. Part of it, you could think of it—like, you can never 

get a—if you think back to black-and-white sets, you can never get 

color on a black-and-white set, because the system doesn’t allow it. 

You had to buy the color TV set to get the color. 

The CHAIRMAN. Well, that gets me back to the sets, again. Part 

of this equation has to be that we stop sets coming in that are 

going to require people to convert. What is wrong with the suggestion that was made that we require anyone producing a set after, 

say—what?—November 15th in this country—or selling them—has 

to have a chip in it that converts it? What’s wrong with that? 

Mr. SHAPIRO. I think what’s wrong with that is, you take a $70 

13-inch set, and you would add another $150 or so of cost to it, and 

consumers would go in and say, ‘‘Why—what happened to the price 

of the TV sets?’’ 

The CHAIRMAN. The chips only—the chips in this thing don’t cost 

that much money. 

Mr. SHAPIRO. In three or 4 years, they may not; but today to add that integrated feature to a TV set, it costs a minimum of $100 to 

$200, if not more. It’s a very sophisticated—almost first- or secondgeneration process now. 

The CHAIRMAN. Well, how do we get away from the point 

that—— 

Senator BURNS. Stick the box in. 

Mr. SHAPIRO. But the box costs that amount of money, and someone has to pay—— 

The CHAIRMAN. We’re going to pass a law that says that this is 

the absolute drop-dead date. But, meanwhile, the country gets 

flooded with these things that won’t—that are going to require settop boxes to enjoy the signal. 

Mr. SHAPIRO. Yes, but nine out of ten of those are not even being 

used for analog—for over-the-air signal. 

The CHAIRMAN. You said one of our four people buying a new TV 

set—— 

Mr. SHAPIRO. One out of four families every year, if not more. 

The CHAIRMAN. I’ve got to tell you, they must be producing kids, 

then, because they’ve still got their sets out there, don’t they? 

134 

Mr. SHAPIRO. Well, my point—— 

The CHAIRMAN. I mean, these sets are just another added-on set 

to the analog area, is what I’m telling you; they’re not coming in 

digital. 

Mr. SHAPIRO. Well, now we’re selling more digital sets than we 

are analog, and that trend is going to increase. If Congress sets a 

hard deadline, that’ll increase even quicker and more. And once 

Congress is—once we’re able to say, ‘‘The law is that these sets will 

no longer get a signal after 2008,’’ the consumer’s going to start 

thinking about it. Today, forcing consumers to think about it, when 

they see—you know, they see two sets side by side, one is great, 

with a big picture, but it’s $700 more than the old analog one—but 

they may want to use that analog one for a DVD, for video games. 

That’s what these sets are really being used for. Broadcasting now 

is a very minor use of a television set. 

The CHAIRMAN. I’ve told this to my colleagues before, I don’t like 

to confess my stupidity, but I was convinced, a year ago, that the 

set I bought was digital. It’s analog. 

Mr. SHAPIRO. Well, I would like to—— 

[Laughter.] 

The CHAIRMAN. Right on the face, it says ‘‘digital,’’ but it’s not— 

it’s digital-ready, they told me. 

Mr. SHAPIRO. Well, once you experience HDTV, I think you’ll remember it, because it has such a great big wide picture. 

The CHAIRMAN. I understand that, but I don’t want that experience for other people, buying a set who think it’s digital and it’s 

not. 

Senator BURNS. No, but, listen, I’ll tell you what, there is a difference, though, Senator, between a digital TV set and a high-definition television set. Remember that. 

The CHAIRMAN. What would it take to have people agree they put 

that on the set? I believe, if we set a date—let’s take the original 

date, 2006, OK? Suppose we said—the place—the country would 

still be flooded with those sets that won’t pick up the signal. 

Mr. SHAPIRO. They would be—that would allow manufacturers to 

put labels saying, ‘‘As of 2006, that you will not get a signal on 

this, and, essentially, you’re buying a monitor, you’re buying something usable for video games, or for cable, or satellite.’’ That would 

allow that. 

But we are supporting a hard deadline of almost any date, as 

long as there’s a hard deadline. We want to see that. That allows 

us to tell consumers that Congress has said this will happen. 

The CHAIRMAN. Senator Inouye has a question. 

Senator INOUYE. I think we can reach certain conclusions. First, 

every member of the panel and the Committee has used the words 

‘‘deadline,’’ ‘‘hard date,’’ ‘‘drop-dead’’—— 

[Laughter.] 

Senator INOUYE.—or what have you. Second, I think we can conclude that whatever is involved here is complex and complicated. 

And I’m just wondering, do most of the people of the United 

States realize what’s happening in this room? Do they know that 

we’re discussing conversion? Are they prepared for it? If we suddenly thrust upon them a deadline, what’s going to happen? 

Mr. TOWNSEND. Senator Inouye—— 

135 

Senator INOUYE. We’re a bunch of politicians here. 

Mr. TOWNSEND.—you raise an extremely valid point. I don’t believe the American people have any idea what is being discussed, 

and the significance of it, and what it’ll mean for them. And so, I 

believe Mr. Lawson, this morning, indicated that this needs a kind 

of Y2K preparedness. I wouldn’t want to overstate it, but there are 

a lot of pieces that have to come together for people to be able to 

feel comfortable with changing how they receive signals on their 

television set, and knowing how much it’s going to cost them. 

Senator INOUYE. If what you say is correct, should we involve 

ourselves in some educational process? 

Mr. KIMMELMAN. Absolutely, Senator Inouye. I think if the Committee moves forward with legislation, if you set a date, if you go 

forward, it’s incumbent upon all of us to come together with an informational program. And it’s really all the industry. I know it’s 

not their motivation, but, in reality, they’ll make a lot of money 

selling a lot of equipment here, and someone’s going to pay for it. 

Whether it’s consumers or someone else, I don’t know. And so, it’s 

really incumbent upon all of us to work together to make sure people are well informed, and they know that what they buy will work 

and how it’ll work. 

Mr. SHAPIRO. Senator Inouye, we would welcome your involvement. We’ve spent several years, and several million dollars educating the public about this, and, indeed, nine out of ten American 

adults are now aware of the terms ‘‘DTV’’ and ‘‘HDTV,’’ and over 

half intend that their next TV-set purchased will be digital television. 

But, while we’ve been out there promoting over-the-air television 

and broadcasting, and having websites for how to buy an antenna, 

and doing all these things, the broadcasters have been almost totally silent on this; and, instead, they’ve focused on regulating 

cable, and regulating satellite and regulating us. And we’ve been 

asking the broadcasters to step up and promote free over-the-air 

broadcasting, and they have not. And I think this would be an excellent opportunity—I hope, as a part of any legislation, there is a 

mandate that they do that. If they’re going to get this great public 

spectrum, they should be out there promoting the fact that there’s 

free over-the-air broadcasting, and that there’s HDTV, and they 

have not done that, to this point. 

The CHAIRMAN. Mr. McEwen? 

Mr. MCEWEN. Yes, I think—you know, I think the time has 

come. And, you know, I would encourage you to keep on the thinking that you’re going down this road, and that is that—you know, 

what we were trying to say, and we’ve been saying for years, is 

that, in 1997, when you mandated that we were going to get this 

spectrum, if you had made the decision then that in 5 years there 

wouldn’t be any more analog sets built, that would have stopped 

the problem. We wouldn’t be having this problem. And the problem 

is, today you’re re-examining that same issue. 

If you don’t make that decision sooner or later, it’s going to just 

continue to be a problem. I mean, the education is a very important 

issue, I agree with that, but you can’t start educating until you can 

tell people what to expect. And they don’t know what to expect 

without you making that date certain. 

136 

The CHAIRMAN. I think it should have a double-whammy, and 

that is, we won’t allow a set to be sold after a certain date that’s 

not digital, but we won’t provide a set-top box for any TV that’s 

bought after a date closer to us. I just don’t think we should do 

that. 

Let me—— 

Mr. SHAPIRO. Mr. Chairman, the FCC has done that. There are 

dates that say you cannot sell an analog set, alone. And we are respecting those dates. 

The CHAIRMAN. They did that, but I don’t think it’s very enforceable—— 

Mr. SHAPIRO. Well, for larger TV sets now—you cannot buy a 

larger analog set. 

The CHAIRMAN. That’s a large one. 

Mr. SHAPIRO. And it’s going down. Next year, it will be almost 

everything. 

The CHAIRMAN. Well, we want to bring it really closer to us. 

Let me take a last comment and privilege. 

You mentioned the German experience. Just keep in mind that 

my state alone is bigger than Italy, Germany, France, and Spain. 

We’ve got a different country here. You can learn much from what 

goes on on the continent. I really think we ought to think very seriously about what happens to rural America, in terms of this legislation. And we, all of us, represent portions of rural America. So, 

I think we will reflect it in the Committee. 

Anyone else have any questions? 

Yes, Mr. Kennedy? 

Mr. KENNEDY. Senator, I just want to add to Senator Inouye’s 

discussion about education. I think that’s very important. I think 

that, to date, the debate has been mischaracterized. It has been 

mischaracterized largely, I have to say, by the broadcasters as 

‘‘turning off television.’’ I think what we’ve tried to show today is 

that it’s not about turning off television; it’s about releasing spectrum for commercial and first-responder purposes. TV viewers, 

over-the-air viewers, with the right converter box, are going to get 

more choice, they’re going to get better pictures. So, I think to underscore the educational need here to, kind of, make sure everybody understands what the real debate is about. 

Thank you. 

The CHAIRMAN. I hope you will be willing to answer questions of 

some of the people who have got very technical questions. 

Mr. Townsend? 

Mr. TOWNSEND. Senator, you know, your point about the rural 

areas, I think, has been a little misconstrued in some circles. I 

think the rural areas are going to be the big benefactors here. And 

the reason is, even though everybody thinks they’re the people who 

receive over-the-air television, that’s not true. The rural areas generally have a much lower number of over-the-air television sets 

than the metropolitan areas do, because of the satellite receivers. 

For example, in Montana, which I think you would definitely classify as rural, there are—under 10 percent of the over-the-air sets 

are receiving TV over-the-air. 

I think the big benefit’s going to be—taking Montana or Alaska, 

or any of these states, really—is that if you do the DTV transition, 

137 

you’re going to have very few rural people affected by the over-theair sets, and tons of them able to get rural broadband. And so, 

they’re going to be—they’re not going to have much downside from 

watching TV, but they’re going to have an enormous upside by getting in rural broadband. 

The CHAIRMAN. I hope you’re right. Those rich ranchers up there 

in Montana, they can afford it. I’m not sure the reindeer herders 

can. 

[Laughter.] 

The CHAIRMAN. Thank you all very much. 

[Whereupon, at 4:10 p.m., the hearing was adjourned.] 

(139) 

1 Cable World, May 22nd issue (p.32). 

A P P E N D I X 

PREPARED STATEMENT OF JERRY K. ROSE, PRESIDENT, 

RELIGIOUS VOICE IN BROADCASTING

Multicast must-carry in digital television (DTV) is the single most important legislative issue for full-power religious broadcasters in our country. As the Committee 

considers introducing a DTV bill this session, we would like to encourage you to include a mandatory multicast must-carry provision to ensure non-major network affiliated, small, independent, religious and minority broadcasters maintain a proportionate voice in the digital television landscape. 

In this regard, the following testimony will provide insight on four important 

issues raised during the multicast must-carry debate; offer detailed information regarding the financial hardships being faced by RVB stations working to comply with 

the government mandated build-out to DTV; and supply information on the types 

of programming RVB stations air and produce and their programming plans for 

multicasting in DTV. 

First, although cable operators have invested millions to build their systems out 

to digital, broadcasters have also invested millions, sometimes up to 75 percent of 

their operating budget, to meet the minimum DTV requirements mandated by the 

Federal Government. However, cable operators made their decision based on a business model that will reap significant benefits; while small, independent and religious full-power stations were mandated to make this burdensome investment, even 

in circumstances where the business model was not a profitable venture for their 

stations. To add to the dilemma, many religious broadcasters will experience a dilution of their voice when they become one channel out of 800–1000 on a digital cable 

system instead of one of 100 channels on an analog system. Multicast must-carry 

offers these broadcasters an opportunity to maintain a proportionate voice in the 

digital television environment. 

Second, broadcasters are not asking cable operators to carry any additional spectrum, not a single MHz more, than is currently being carried on their analog systems. Moreover, cable operators can now compress each broadcaster’s 6 MHz of 

spectrum into 3 MHz on their digital cable systems, even with multicast must-carry, 

thereby reducing by 50 percent their carriage requirements, and are not required 

to carry broadcast channels beyond one-third of their capacity. In their latest DTV 

position paper dated May 26, 2005, the Christian Broadcasting Association quoted 

John Alchin, CFO of Comcast, as stating: ‘‘We can turn 70–80 analog channels into 

1000–1600 digital channels with 15–20 compression with virtually no investment’’.1

Therefore, cable operators will not face debilitating capacity issues if required to 

carry broadcaster’s multicast signals. This is especially significant considering that 

most cable operators have among the highest profit margins—40 percent and 

more—of all telecommunications industries in the country. 

Third, while RVB takes no position regarding the recent consolidation of multimedia conglomerates, media concentration has contributed to an increase in horizontal and vertical integration. Greater integration exists today than before the 

1992 Cable Act, which makes multicast must-carry increasingly important to preserve the government’s interest in free over-the-air local broadcast television, information from a multiplicity of sources and fair competition in the television programming market; issues cited by the Supreme Court as justification for must-carry in 

Turner Broadcasting System, Inc. v. FCC. We strongly believe there should be a 

place for broadcasters who are not affiliated with major media conglomerates in the 

digital television landscape. 

This is especially important given that RVB stations provide the type of local and 

community focused programming that Congress intended to preserve. For example, 

WLMB–TV 40 in Toledo, Ohio, airs a weekly program entitled, Find a Local 

Church. The program features various places of worship in the local Toledo region 

140 

so that those who are new to the area can familiarize themselves with the region’s 

local churches. KSCE–TV 38 in El Paso, Texas, offers several hours of Spanish-language programming daily to serve their large Hispanic community with local public 

interest and education programs. They also have 3 hours of Arabic-language programming available on a weekly basis, including a women’s interest program. 

KTLN–TV 68 in San Francisco, California, focuses on Korean, Chinese, and Spanish-language programming to serve the diverse demographic of that area. KTLN is 

also part of the Total Living Network in Aurora, Illinois, which produces approximately 700 hours of local programming yearly, including Newsmakers, a program 

covering current events of importance to the local Chicago communities. (More examples of programming aired and produced by RVB stations and their programming 

plans for multicasting in digital television can be found in the Appendix.) 

Cable operators argue that market forces should determine which broadcasters receive cable carriage of their multicast signals. In a perfect world, the most ‘‘compelling’’ programming would receive carriage and a government mandate would be unnecessary. However, recent events indicate that this is not always the case. For example, during the ‘‘two-dish’’ satellite debate in Congress last session, it was revealed that satellite television providers were systematically placing some highly 

rated stations, including Spanish-language and religious broadcasters, on a second 

dish which reached a substantially diminished viewing audience. Satellite providers 

offered no clear or logical explanation for this systematic practice and later moved 

these stations to the first dish when questioned about this practice by Members of 

Congress. 

Furthermore, operators found that a market-based approach did not work for 

cable channels under the proposed a la carte structure and informed the Hill that 

many cable programmers would not survive without bundling that assured cable 

carriage for certain channels. Cable argued that their business plan could not be 

sustained under an a la carte structure that would allow viewers to pick and choose 

programmers and that the market could not accurately determine what programming was considered compelling by viewers across America. Yet, in the case of 

multicast must-carry, cable operators are urging Congress to let the market determine which broadcasters should receive carriage of their multicast signals, primarily because they own competing programming. Arguably, religious, small, independent, Spanish-language and non-major networks and broadcasters are at a bigger disadvantage than cable channels in seeking carriage of their multicast signals. 

Cable’s positions on these two issues are inconsistent and would result in the disparate treatment of broadcasters and would be detrimental to small, independent 

and religious full-power broadcasters. 

The original intent of must-carry in the 1992 Cable Act was to ensure that small, 

independent and non-major media affiliated broadcasters would continue to provide 

valuable diversity of programming to our nation. As we transition to digital television, multicast must-carry will help small, independent, minority and religious 

broadcasters maintain their voices and allow them to continue serving niche markets with diverse local and community-focused programming. We would encourage 

the Committee to consider these issues as the DTV bill develops this session and 

ask that it include multicast must-carry. 

Financial Hardship Information of RVB Stations Working To Comply With 

the Government Mandated DTV Build-Out 

RVB stations are experiencing significant financial hardships as a result of the 

government mandated DTV build-out. The government mandated DTV build-out 

disproportionately affects small and independent broadcasters and threatens our viability. 

RVB stations did not seek Federal support for digital television, nor did we commit to airing high definition programming in exchange for digital spectrum. Major 

networks like ABC, NBC, FOX and CBS can more easily finance the transition and 

leverage their assets to negotiate strong retransmission consent agreements and 

cable carriage for their secondary networks, making DTV a profitable undertaking 

for their companies. Small, independent and non-major network affiliated broadcasters lack the power to negotiate for cable distribution of our multiple digital 

broadcast signals and need multicast must-carry to retain a proportionate voice in 

digital television. In the absence of multicast must-carry, major networks and 

vertically integrated cable channels are the beneficiaries of a Federal DTV mandate 

that places smaller broadcasters at a federally imposed competitive disadvantage. 

With the foresight that forced conversion would require debilitating financial investments, dilution of our voices and reduced services for our viewers, RVB would have 

opposed Federal regulations for an unfunded digital television mandate. 

141 

Promoting diversity of viewpoints and choices in the television medium is an important government interest. A regulatory environment that gives small and local 

broadcasters the opportunity to maintain existing local operations, while simultaneously fostering growth and a proportionate voice in digital television, preserves 

a basic tenant of American communication policy—promoting widespread dissemination of information from a multiplicity of sources. The impeditive costs associated 

with the digital television transition, for non-major network affiliated broadcasters 

without the assurance of multicast must-carry, will continue to disproportionately 

affect our ability to function, considering many of us are only marginally successful 

under an analog business model. 

The challenges of the digital transition have caused some broadcasters to sell 

their stations, and others will falter because of financial difficulties associated with 

the uncertainty of digital must-carry requirements. Multicast must-carry is the single most important issue facing RVB stations as we plan for future broadcast operations in digital television. 

The following is a partial list of RVB members experiencing financial hardships 

during the digital transition: 

Kevin Bowers WTLW—Lima, OH 

Garth Coonce Tri-State Christian Television—Marion, IL 

Bob D’Andrea Christian Television Network, FL 

Steve Easom KSBI—Oklahoma City, OK 

Blackie Gonzalez KCHF—Santa Fe, NM 

Rusty Yost WGGN—Sandusky, OH Christian Faith Broadcast, Inc. 

Rich Hawkins WLLA—Kalamazoo, MI Christian Faith Broadcast, Inc. 

Dan Huber WBPH, Allentown, PA 

Ken Mikesell WTGL & WLCB—Orlando, FL (WTGL DTV 53 & WLCB DTV 46) 

Charles Reed KMCT—Monroe, LA 

Grace Rendall KSCE—El Paso, TX (KSCE DTV 39) 

Jerry Rose KTLN—Novato, CA 

Richard Schilg WSFJ—Newark, OH 

Jamey Schmitz WLMB—Toledo, OH 

Mike Smith WLFG—Grundy, VA & WAGV—Harlan, VA 

Peter Sumrall LeSea Broadcasting—Southbend, IN 

James Thompson WGGS—Greenville, SC; WATC-Atlanta, GA 

Digital Build-Out Demands Significant Financial Investments With Limited 

Opportunities for Independent Broadcasters To Mitigate Costs 

The Government mandated digital build-out imposes precarious financial burdens 

on non-major network affiliated broadcasters forced to finance higher electricity 

bills, maintenance fees, engineering and attorney costs, insurance premiums, phone 

bills, digital equipment and additional supplies and services necessary to meet DTV 

operating deadlines. Depending on the market location, RVB broadcasters have currently expended anywhere from $50,000 to $4.5 million to convert their stations, 

and are expected to spend approximately $156,000 to $5.5 million more. 

Independent stations in the same market as network-affiliated broadcasters may 

outlay similar, but disproportionate, costs during the digital conversion. Expenditures by RVB stations typically cover only the necessities of conversion but constitute a large portion of total operating revenues and a significant drain on resources. Following the digital conversion, independent stations will have spent resources equivalent to major network stations but will continue to be systematically 

refused MSO carriage of our multiple signals. We will not be able to use advanced 

digital technology to defray or recoup our investments without must-carry. However, 

major network affiliated broadcasters are currently striking deals for carriage of all 

their signals including secondary network channels by using their leverage as large 

multi-tiered media conglomerates. Many RVB stations will not be able to meet financial obligations resulting from digital television investments without assurance 

that our multicast signals will be distributed through cable. 

Table 1 reflects the to-date expenditures made by some RVB stations in preparation for the digital transition. Also listed are estimated future costs necessary to 

complete the conversion and operating costs for the year 2003. 

142 

Table 1 

(All figures are approximate) 

Call Sign Market To-Date Cost of Build 

Out 

Future Costs for 

Completion 

2003 Operating 

Expenditures 

KTLN San FranciscoOakland-San 

Jose 

$1 million $4 million $1,802,717 

WGGS Greenville, SC $400,000 $2 million $1,317,000 

WATC Atlanta, GA (WGGS) 

WTGL Orlando, FL Nearly $3 million $2.5 million $1,871,000 

WLCB 

KSCE El Paso, TX $200,000 $1.6 million $360,541 

WLMB Toledo, OH $412,000 $156,000 $1.2 million 

WLFG Grundy, VA $4.5 million $350,000 $480,000 

WAGV Harlan, KY 

The figures in Table 1 vary from market-to-market and the extent of actual buildout, but share the important commonality of an undue burden. The best use of the 

digital spectrum for RVB stations will likely be a combination of high-definition and 

standard definition programming with multicasting. Each community will have a 

custom planned digital television model based on its local needs. A mixture of spectrum usage will allow stations to develop new and expanded community service programs, recoup expenses imposed by the government’s unfunded digital television 

mandate, and ensure that local communities continue receiving important, demographically tailored and inspirational programming from a multiplicity of sources. 

All RVB member stations have reduced operating costs to fund the digital transition by limiting or eliminating valuable programming. Such decisions are among the 

most difficult to make. Our stations are struggling with the burden of developing 

digital programming plans in an uncertain regulatory environment, while simultaneously laboring to finance the costs of digital build-out. Multicast must-carry is the 

lynchpin to our viability. 

Multicast Must-Carry Is Necessary To Create Parity Between Analog and Digital 

MSO Carriage Requirements 

Must-carry legislation was enacted to protect small, independent and non-major 

network affiliated local broadcast voices that were being denied carriage by cable 

operators. The Commission’s ‘‘primary video’’ ruling adversely affects the balance 

created in the 1992 Cable Act and unduly burdens smaller broadcasters struggling 

with the transition. 

Recent reports indicate that major broadcast networks have either signed or are 

negotiating multicast carriage agreements for their digital signals. Major networks 

have historically used their leverage to negotiate successful retransmission consent 

agreements and multicast carriage deals are expected. Major network affiliated 

broadcasters, including their commonly owned secondary networks, have a distinct 

advantage in developing digital television business and programming plans because 

they can capitalize on advanced technology with the understanding that cable operators will carry all their new programming streams. 

For instance, Viacom, which owns CBS, possesses the leverage to negotiate carriage of its broadcast and cable channels, including MTV, through its commonly 

owned cable networks that are affiliated with cable distributors. We are not affiliated with profitable and dominant major network broadcasters that can negotiate 

multicast carriage of secondary networks, like NBC and Telemundo or CBS and 

UPN; while leveraging their main broadcast channel feed. As independent stations, 

we would hope that our programming, public services and audience loyalty would 

prompt cable to carry our multicast signals. However, this has not been the case 

and in instances where local cable systems have entertained our requests for dialog 

on digital carriage, we have been informed that their corporate offices, located in 

distant cities, have policies against carriage of independent station’s multicast channels. 

Regardless of our extensive record of public service and community support, independent full-power stations will continue to be systematically rebuffed when seeking 

carriage of multiple signals in the absence of a FCC mandate. However, trends in 

digital carriage requirements show that multicasting is an important component to 

the future of digital television. In order to compete in digital television with major 

networks, their affiliates and other cable programmers, we must be able to maintain 

parity in the television medium. 

143 

Evidence of RVB Stations Experiencing Financial Difficulty Is Pandemic 

The following are examples of RVB member experiences with the digital television 

transition: 

Mr. Jamey Schmitz of WLMB–TV 40 in Toledo, Ohio, runs a nonprofit, commercial television station primarily funded by viewer contributions with additional financial support from advertising revenues. To-date, they have incurred DTV costs 

of $412,000, $12,000 of which was expended on electricity alone. WLMB estimates 

that $156,000 is necessary to complete the transition. Moreover, if the transition extends beyond the 2006 target date, WLMB will be required to replace a dated analog 

transmitter at a cost of $500,000—a significant investment for this station. 

WLMB has been on the air for 5 years and won the prestigious National Religious 

Broadcaster’s Television Station of the Year award for 2 consecutive years, 2003 and 

2004. The station is a valuable part of the Ohio community because of its locally 

produced shows that reflect the unique characteristics of the market. WLMB and 

its viewers were disappointed when the station suspended plans to invest in new 

community-based programming, including popular local high school sports, due to 

the financial burdens of the digital transition. WLMB is contemplating infomercials 

as a source of revenue; although Mr. Schmitz and his colleagues would prefer to 

focus on the public service and community programming that continue to make 

WLMB a successful, valuable and beloved community broadcast station. 

Ms. Grace Rendall of KSCE–TV 38 in El Paso, Texas, estimates that their annual 

operating expenses for their digital TV station will exceed $500,000 per year. This 

figure is in addition to their analog expenses and significantly higher than KSCE’s 

2003 total gross revenues of $360,541. As a non-commercial station dependent on 

viewer contributions, KSCE has already borrowed $15,000 and anticipates financing 

an additional $1.6 million to comply with the government-mandated build-out. Ms. 

Rendall has encountered resistance in securing additional financing because of the 

perception that declining revenue will be realized from the digital operations of 

KSCE without cable carriage of their multicast signals. 

KSCE has engaged outside help to supplement its small staff and identify outside 

funding sources, conduct audits for grant proposals and hire personnel to plan and 

implement the digital conversion. The financial difficulties KSCE is facing have 

caused an indefinite delay of plans for developing new and expanded free programming. KSCE is a small station suffering from a loss of valuable time, resources and 

assets which they are investing to meet the FCC’s imposed digital deadlines. 

Mr. Ken Mikesell’s digital stations, WTGL–DTV 53 and WLCB–DTV 46 in Orlando, Florida, will cost an additional $75,000 per year to operate, in addition to annual debt servicing and programming costs associated with the transition. An investment of $5.5 million more is necessary for DTV completion. Borrowing funds for 

this venture is difficult because lenders express concerns about the negative financial implications of independent broadcasters’ ability to service debts without a clear 

digital multicast must-carry requirement. Mr. Mikesell’s financial struggles have 

forced him to downsize from 25 to 14 employees. He continues to seek funding 

sources to avoid disenfranchising his remaining employees and the elderly, minority 

and poor communities of Orlando, that comprise the majority of his viewing audience, and rely on the important local programming his stations provide. 

Mr. Bob D’Andrea, Chairman of Christian Television Network (CTN) and owner 

of Florida stations WCLF–TV 22 in Tampa Bay; WHBR–TV 33 in Pensacola; 

WRXY–TV 49 in Fort Myers; and WFGC–TV 61 in West Palm Beach, expects his 

annual operating expenses to increase an additional $166,000 for DTV operations. 

Mr. D’Andrea has borrowed $5 million of the $7 million currently necessary for the 

digital build-out of his Florida stations, and estimates financing another $700,000 

for completion. The Christian Television Network (CTN) is currently airing both 

analog and digital signals from their stations and requested FCC authority to cease 

analog broadcasting operations to reduce costs. The FCC denied their request, forcing CTN to implement across-the-board cutbacks. 

Mr. Mike Smith’s digital operations for WLFG–TV 68 in Grundy, Virginia and 

WAGV–TV 44 in Harlan, Kentucky, have increased annual operating expenditures 

by $150,000. Moreover, maintaining the new digital equipment requires specialized 

engineering costs of $100,000 during the first year and $120,000 for subsequent 

years. Insurance for the WLFG and WAGV buildings and their new digital equipment, and higher phone bills associated with the remote control transmitter that operates from the studio, have placed major financial burdens on Mr. Smith’s operations. In an attempt to mitigate costs, Mr. Smith began airing infomercials, which 

he removed after receiving negative feedback from his viewer base. He continues to 

look for creative cost cutting and financing arrangements to support his broadcast 

operations, but is experiencing significant difficulties and sees multicasting as the 

144 

2The America Channel, ‘‘Market Analysis of Networks in 20+ Million Homes’’ (May 31, 2005). 

only way to maintain and increase his viewing audience and sustain a viable business model for his digital stations. Dr. James Thompson has borrowed $400,000 to build out of his stations WATC– 

TV 57 Atlanta, GA, and WGGS–TV 16 Greenville, SC, and must acquire an additional $2 million to complete construction. An annual debt service of $75,000 plus 

a yearly increase of $12,000 in expenses for DTV operations has forced Dr. Thompson to contemplate infomercials to meet rising costs, a measure he hopes to avoid 

through increased programming revenues from multicasting. 

Without a Multicast Must-Carry Requirement, the Financial Burdens Imposed by the 

DTV Transition Will Perpetuate the Loss of Independent Religious Broadcast 

Voices and a Diversity of Viewpoints 

When the DTV build-out was announced, some family-friendly and spiritual 

broadcasters sold their stations because the costs of providing DTV services were 

not feasible without the assurance of cable carriage for digital signals. The mission 

of religious broadcasters is unique, in that RVB member stations are not driven by 

profit maximization. Our success is measured by the positive impact we have on our 

local communities and viewing audience, and we will continually resist compromising programming choices aimed at serving our loyal constituencies. 

However, small and independent stations with limited resources will not survive 

a DTV transition that imposes severe financial burdens without multicast requirements for cable operators. The systematic refusal by cable operators to carry the 

multicast signals of smaller independent broadcast stations has resulted in systematic refusals by financial institutions to invest in our digital businesses. Our stations simply cannot survive in a digital television world where the Federal Government places us at a non-functional competitive disadvantage. Should multicast 

must-carry not be enacted in the near term, America will permanently lose valuable 

independent television voices—and these stations will never be part of the television 

landscape again. 

As the transition to digital television continues to offer viewers new and innovative programming, it is essential that there remain a place for small, independent 

and non-major network affiliated broadcasters. It should be noted that these stations face tremendous difficulties in seeking to get their multicast signals carried 

even when they offer compelling local programming and possess a strong and loyal 

audience. 

In fact, research indicates that 81 percent of programmers are affiliated with a 

major media company.2 Thus, small, independent and religious broadcasters who 

are not affiliated with a major media conglomerate lack the leverage to negotiate 

with cable operators to receive carriage of their multicast signals in digital television. Given the dilution of their voices in digital television, it is certain that some 

of these stations will either be forced to enter into some type of financial ownership 

or affiliate agreement with major media conglomerates or go dark. 

This would be tragic considering that the original intent of must-carry in the 1992 

Cable Act was to ensure that small and independent broadcasters would continue 

to provide valuable diversity of programming to our nation. As we transition to digital television multicast must-carry will, in many cases, provide the only assurance 

that small, independent, minority and religious broadcasters can maintain a proportionate voice and continue serving niche markets with diverse local and communityfocused programming. We would encourage the Committee to consider these issues 

as the DTV bill develops this session and ask that it include multicast must-carry. 

APPENDIX A 

Examples of Current RVB Programming and Projected Multicast 

Programming 

Mike Reed plans on utilizing the benefits of multicasting to further expand the 

fifty hours of local programming his station, KMCT–TV 39, airs each week in the 

West Monroe, Louisiana area. KMCT’s current programming includes Fully Alive, 

a live, one-hour nightly talk show hosted by Mr. Reed, which brings diverse people 

from the community together to discuss issues of the day. Guests include Members 

of Congress, Louisiana Governors and local Mayors who speak on topics such as 

health, marriage and other local concerns. During the show KMCT has a phone 

bank available for viewers to call in with questions, concerns or comments. Lessons 

from God’s Word, hosted by Pastor Eugene Brown, provides a spiritual outlet for 

those who cannot leave their homes because of injury or illness. Let God Be True 

145 

is a locally-produced show that airs the preaching of area churches and highlights 

the teachings of Pastor Larry Burrel, who uses graphs and visual aids to educate 

viewers. Sacred Conversations is a locally-produced show hosted by Mr. Robert 

Charles Payne, a West Monroe businessman, and previous football coach for West 

Monroe High School. Mr. Payne invites guests to speak about issues facing the community, including sports, health and disciplines of life. 

KMCT’s programming schedule is replete with locally-produced shows that provide valuable services to Louisiana communities. KMCT would utilize the benefits 

of multicasting to lengthen and expand their current programming to include a 24- 

hour church channel that would cover local services and church sponsored community activities. Additionally, KMCT would like to air a 24-hour children’s channel 

and 24-hour youth channel with programs focused on the specific interests of these 

age groups. In an effort to promote student sports in the area, KMCT would like 

to expand local sports coverage by devoting a channel to playback shows of Neville 

High School and Ouachita High School. Each of these schools currently airs an hour 

per week of game highlights and interviews with coaches and players. Ouachita 

High School also interviews students to discuss activities on campus including clubs, 

organizations and other school sponsored programs. KMCT supports the development of broadcasting and production experience for students at the University of 

Louisiana at Monroe and Grambling University, which has a predominantly African-American student body, by hiring them to work at the station and cover issues 

relating to their university, including local sports. The close proximity between 

KMCT and several high schools and universities will facilitate increased coverage 

of local sports and student activities through multicasting, and facilitate employment opportunities in broadcasting. 

Richard Hawkins is the General Manager of WLLA–TV 64, the only independent 

station in the Kalamazoo-Grand Rapids-Battle Creek market. WLLA offers a variety 

of family-friendly programming, boasting the most hours of local programs in the 

market—17 hours per week. Among the shows WLLA airs is, Transformed, a daily 

show hosted by Pastor Joel A. Brooks, Jr. that focuses on the African-American constituency through programming that promotes racial harmony. Mr. Brooks leads an 

inter-denominational and multi-racial congregation of 2,000 people. Getting a Grip 

is a unique show, hosted by one of the few female Pastors in Kalamazoo. Mrs. Beth 

Jones’ teachings extend to the community at large and reflect a female perspective 

on the Christian doctrine. Pastor Duane VanderKlok hosts Walking by Faith, a daily 

teaching and bible study program that breaks from tradition by taking viewers on 

adventures that relate to bible stories, including hunting expeditions. Pastor Addis 

Moore hosts Mt. Zion Baptist Church, another program that targets the AfricanAmerican population and focuses on the needs of that community. 

In addition to valuable local church programming, WLLA works with the Western 

Michigan University (WMU) to air local coach’s shows, as well as men and women’s 

basketball games. In association with the Michigan High School Athletics Association, WLLA is committed to annually airing the girl’s high school volleyball championships from the WMU campus, which provides a unique opportunity for these 

young girls to gain public exposure. WLLA would use digital technology to multicast 

a 24-hour channel of other local sports. Other digital program plans include a 24- 

hour channel of family-friendly and wholesome programming, and a youth channel 

with music and programs to benefit young people. 

Dr. James Thompson has developed a loyal and devoted following in South Carolina, due to his remarkable thirty-year record of broadcast public service to Greenville, and its surrounding areas with his station, WGGS. He has similar stature in 

Atlanta, Georgia, where he owns a second television station, WATC. Most notably, 

Dr. Thompson and his wife Joanne host The Nightline, a live two-hour weeknight 

call-in program on WGGS, which gives people from the community an opportunity 

to discuss a variety of local interests. Discussion topics have included conversations 

on current weather conditions and crop conditions; oral histories of South Carolina; 

highlights of area elderly and indigent care services as well as conversations on how 

issues of national significance affect South Carolinians. The Atlanta station, WATC, 

devotes the same amount of time and resources to their live, local nightly show. 

WGGS’ daily variety program, The Peggy Denny Show, offers cooking and household 

tips and reviews of local arts and politics. Nancy’s Heartbeat, hosted by Nancy 

Corso, Greenville’s local chiropractor with a Master’s Degree in Trauma, is a weekly 

show on fitness and the latest news in medicine. Jewish Jewels is a show that focuses on the Jewish religion and those who practice the faith in the area. 

Since the beginning of the Iraqi War, Dr. Thompson’s stations have been airing 

a daily scroll of the names of the local soldiers who are committed to active duty 

in Iraq and ask viewers to send prayers and well wishes to the troops. WGGS keeps 

a phone bank of volunteer ‘‘listeners’’ who comfort lonely or in need viewers in the 

146 

area and refers more troubled individuals to local crisis help groups. WATC also is 

the home to a unique program, The Gravedigger Show, hosted by Joe Oreskovich, 

a former homeless man who was rescued by the local fire department. Joe interviews firemen, policemen, doctors, politicians and others to inspire and provide resources, guidance and hope to those in most need and at-risk, including alcoholics, 

the unemployed, and the indigent. 

Our stations seek the ability to multicast to expand current programs and invest 

in developing new and original programming. On numerous occasions, North Greenville College has asked us to air student produced shows (a request that is usually 

unable to be granted because of established programming commitments). With the 

ability to multicast, we could provide the College its own channel, which would benefit both the students and the community. Moreover, because of its geographical location, WATC would like to air a 24-hour gardening and agricultural channel, in 

addition to a 24-hour sports channel that will focus on elementary, secondary and 

college level sports. Finally, we would continue to reach out to the community by 

providing a vocational and employment channel that would be a resource for job announcements, provide information on various trades and professions and promote 

employment in the area. 

Grace Rendall and KSCE–TV 38 in El Paso, Texas, play a unique role in their 

diverse community by providing bilingual and local programming to the ethnic and 

religious groups in the region. KSCE airs daily programming in English and Spanish and provides valuable media resources for El Paso’s large Hispanic community, 

which has limited family-friendly programming choices. Additionally, KSCE airs a 

variety of programs that cater to the sizable El Paso Jewish community, like the 

Monday thru Friday showing of the daily news by the Israel Broadcast Authority 

from Jerusalem and Jewish high holy season shows. KSCE is also the only broadcast station in the area that meets the needs of the estimated 3,000 Arab-speaking 

population. They broadcast 3 hours a week in Arabic, with teaching, music and a 

woman’s interest roundtable. With the ability to multicast, KSCE is interested in 

continuing its diversity outreach by dedicating two digital channels to full time 

Spanish-language formats—one for general purpose and the second for a youth and 

adult educational needs. 

Steve Easom’s KSBI is the last locally owned station in the Oklahoma City, Oklahoma market, and it provides more local programming than all full power stations 

in that DMA combined. With the ability to multicast, KSBI is committed to increasing the youth, elderly and Hispanic focused programming that they currently provide. In addition, they seek to expand their local sports coverage and unique programming. For instance, the Oklahoma City area boasts a strong hunting and fishing community. KSBI produces and airs a program, On the Water and In the Woods 

with Cody and Cody, a hunting and fishing show hosted by two local Oklahoma 

teens that focuses on hunting safety from the experiences of teenagers. Furthermore, when a local major network affiliated station was not able to air Oklahoma 

State University and University of Oklahoma coach’s football playbacks because of 

their affiliate obligations, KSBI negotiated for carriage of the programs. As part of 

the agreement, KSBI stipulated that it would not run overtly sexual ads that may 

be offensive to a family audience during playback airings. Not only did the University of Oklahoma accept these conditions, but the head athletic director commended 

Mr. Easom for ‘‘raising the bar’’ in this area. 

Belarmino ‘‘Blackie’’ Gonzalez’s station, KCHF in Santa Fe, New Mexico, is dedicated to offering the communities of New Mexico positive informational and entertainment choices. KCHF plays an active role in the Santa Fe area through shows 

like Issues & Answers, a weekly program hosted by New Mexico’s Press Secretary 

that invites representatives of state government agencies to discuss valuable state 

programs that are available to New Mexicans. Additionally, KCHF highlights local 

charitable causes including efforts to help victims of the Los Almos fires. Comfort 

My People supports Israeli victims of terrorism through the United Jewish Communities’ programs. With added ability to multicast, KCHF hopes to take their current 

youth programming block and develop a channel that expands its reach to young 

people with shows like The Real, which discusses issues affecting teens and provides 

community outreach and help hotlines for at-risk youth. With multicasting, KCHF 

would expand their Spanish-language programming by developing a channel specifically focused on family-friendly programs for the Hispanic community in New Mexico. 

Jamey Schmitz of WLMB Toledo, Ohio, has committed to using the benefits of 

multicasting to serve local viewers by providing a worship channel that would feature 24-hours of local area religious-related services. This channel would include expanded versions of WLMB’s Pastor’s Point and Find a Local Church, programs that 

feature up to ninety-eight different local religious venues a year. To date, over thirty 

147 

denominations have been represented on these half hour weekly programs. Currently, the station has a backlog of over one hundred community leaders and venues 

awaiting the opportunity to feature their services. In many cases, these shows are 

the only television exposure that churches, synagogues and cultural-specific religious organizations including African-American and Hispanic parishioners are afforded. These shows have been extremely successful in helping new Toledo area 

residents and those new to faith find a place of worship for their families. 

WLMB would also reach out to the growing Hispanic community in Ohio, by starting a 24-hour Spanish-language channel that would expand upon of their current 

weekly half hour Spanish-language program, which is the only foreign language program in the entire market. WLMB regularly receives requests from Hispanic leaders 

to include updates of local Latino-sponsored events on the show. As this segment 

of the population continues to grow, the ability to reach these viewers through a 

channel devoted to their specific needs would utilize free-over-the-air broadcasting 

in a manner consistent with the objectives enumerated in Turner v. FCC. Additionally, WLMB would like to start a 24-hour youth channel (a G rated MTV type channel) that would provide local teens the opportunity to become involved in the production, filming and editing of television programs. Toledo teens would have a local 

outlet to air programming that is timely and relevant to their evolving needs and 

interests. WLMB envisions expanding their current music video show that features 

local artist’s interviews and family-friendly music videos. Finally, WLMB is pleased 

that in 2004, it will begin airing the Toledo Mud Hens baseball games. The beloved 

Mud Hens are the farm team for the Detroit Tigers. With multicast, WLMB would 

air 24-hour local news and sports channels, as a collaborative effort with organizations like the Mud Hens and area high schools and colleges. 

Ken Mikesell’s Orlando, Florida station, WTLG, would use its additional channels 

for Spanish and Asian language content; educational programs including PBS shows 

not aired in the market; shows serving central Florida’s large population of seniors 

and children; a civic and local government channel to inform the transient population of available public services; and other locally-produced programs. The station 

would expand upon its regular programs featuring local nutritionists, physicians, 

counselors and other community leaders who discuss health, psychological and spiritual needs of the community. WTLG produces the Easter Sunrise service at Sea 

World, in Florida, for uplink to stations across the country, including the Armed 

Services Network, which it carries to all U.S. military bases. WTLG is extremely 

active with local social and civic organizations and uses its airwaves to promote interest and support for worthwhile projects. For instance, the station organizes food 

drives for local ministries; arranged for receipt of over 5,000 turkeys to the Destiny 

Food Center in Orlando for Thanksgiving 2002; provided ‘‘Bags of Joy’’ to over 2000 

families through Harvestime International in Sanford; works with Operation Christmas Child, run by Reverend Billy Graham’s son Franklin, to supply toys, toiletries 

and clothing to the needy; and participates in many other rewarding ventures. As 

a melting pot for many ethnicities, Orlando is the perfect example of a community 

in need of additional local programming choices to serve its diverse constituents. 

Christian Television Network (CTN), headquartered in Clearwater, Florida, is 

dedicated to bringing positive Christian programming with family-friendly, wholesome messages to its viewers from all socio-economic backgrounds. Since its inception twenty years ago, CTN, its Tampa Bay station WCLF, and its founder Bob 

D’Andrea have developed unique local programs including, Bay Focus, an original 

show that features and highlights ministries in central Florida that are involved in 

charitable activities to feed the homeless, create support centers in inner cities, and 

provide assistance to the needy. CTN also devotes numerous hours of programming 

to youth and Latinos with original programs like La Vida Ahora (Today’s Life), Vida 

Dura (A Hard Life), Kids Like You, and Kids on the Move. CTN also owns full-power 

stations including WHBR-Pensacola, WHTN-Nashville, WVLR-Knoxville, WRXY-Ft. 

Myers, WFGC-Palm Beach, and WGNM-Tampa. With the ability to multicast, CTN 

will further develop and expand programming that distinguishes CTN from other 

broadcasters. 

While not a 24-hour religious station, KIKU in Honolulu, Hawaii, is unique in 

that it broadcasts in eight languages every week providing Hawaiian Asian language constituents with the only free-over-the-air broadcast programming in their 

native languages. Shows like Korean Christian Broadcasting, Chinese Community 

Broadcasting in Mandarin and Kikaida, entertain and inform those who have no 

other sources of broadcast programming in their native languages. KIKU would use 

multicasting for specialized local Asian language channels. For example, KIKU’s 

Community Calendar, a bi-weekly English service, could be translated into different 

Asian languages. The diverse Hawaiian community depends on KIKU’s programming and multicasting would provide a much-needed outlet for these services. 

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1Transmission may be in one signal format but display in another. 

Finally, Total Living Network (TLN) is a Chicago-based organization with a San 

Francisco affiliate, KTLN. TLN’s main objective is to produce and distribute original 

programming for the TLN schedule and the broader family-friendly broadcast marketplace. The unique programming TLN provides includes Aspiring Women, a show 

designed to address the concerns of modern women of all ages and backgrounds; and 

Health Town, an invigorating, healthy lifestyles show for the entire family. TLN 

also produces Solid Rock VDO, an inspirational and entertaining music video show. 

All Around Rockford is a show that highlights ministries in the community. Mr. 

Jerry Rose, President of TLN, hosts Newsmakers a public affairs program that addresses difficult issues with supplemental media resources including a panel of journalists who discuss current events. Newsmakers was nominated for an Emmy for 

Outstanding Achievement for Information Program-Public Affairs Series. TLN also 

works with several community-based nonprofits, such as Kids Around the World, 

Pregnancy Care Center, Noah’s Ark Animal Sanctuary, Rockford Rescue Mission 

and Motherhouse to provide public service announcements and broadcast exposure 

for their causes. TLN has found that their locally tailored programming brings 

members of the community together. Specifically, TLN focuses its outreach efforts 

on issues to help viewers cope with addiction, physical/mental abuse, health, grief, 

homelessness, gangs, divorce and sexual assault. Multicasting would give TLN the 

opportunity to expand its services and the positive programming. 

PREPARED STATEMENT OF THE CONSUMER ELECTRONICS RETAILERS COALITION

(CERC) 

Consumer Electronics Retailers have been involved in the transition to digital 

techniques since 1985, when they helped introduce the digital audio Compact Disc. 

Two decades later, it is high time to complete this transition. The single most effective thing that the Congress can do is to set a clear, definite, unconditional date 

for the cessation of analog broadcasts. 

CERC members include specialist retailers Best Buy, Circuit City, RadioShack, 

and Tweeter, general retailers Target and Wal-Mart, and the three major retail associations—the North American Retail Dealers Association, the National Retail Federation, and the Retail Industry Leaders Association. 

A Hard Date for Cessation of Analog Television Broadcasts 

CERC has long favored a ‘‘hard’’ and unconditional date for moving exclusively 

to digital terrestrial broadcasts. In light of the complex budgetary and other factors 

involved, we have not presumed to tell the Congress what that date should be. 

CERC agrees with the witnesses and Committee members who participated in the 

July 12 hearings that it should be no later than January 1, 2009. 

The key factor. from CERC’s perspective, is that the date be reliable and unconditional, so that if we tell consumers that analog terrestrial broadcasting via an antenna will not be delivered after that date, it will be a truthful statement. We do 

not want to be in the position of telling customers to buy or not to buy products 

based on inaccurate or unverifiable information. 

Once the transition date is clearly and reliably set, we and our vendors can start 

advising consumers that, on a specific future date, they will need to rely on alternatives to receiving analog signals from an antenna. 

Public Education 

Even without approaching the question of whether a consumer will be impacted 

by the cessation of analog broadcasts, advances in technology keep offering new options and choices to consumers. Most of these have little or nothing to do with 

whether an over-the-air tuner is included. They are: 

• Transmission and Display formats—High Definition; Enhanced Definition; 

Standard Definition—digital (progressive); Standard Definition—interlaced (digital or analog). 1

• Program and screen formats—Widescreen aspect ratio (16x9) or ‘‘traditional’’ aspect ratio (4x3). 

• Signal acquisition—Antenna; cable; satellite; and now ‘‘wireless,’’ and 

‘‘broadband’’ variations. 

• Tuning, authorization, and payment—In the receiver; in a ‘‘set-top box’’ or PVR 

or other device; or through a ‘‘CableCARD’’-enabled set that allows purchase of 

premium channels without a set-top box. 

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2The Guide is available on the front page of the CERC website, www.ceretailers.org; it is provided for the record as an Appendix to this submission. CERC indicated in its press release that 

it has no objection to other entities reproducing or distributing the Guide. 3The entire June 29 press release remains available at www.ceretailers.org. 

• Types of displays—‘‘Traditional’’ and ‘‘slim’’ cathode ray tube (direct view and 

rear-projection); LCD panel; plasma panel; LCD rear-projection; DLP rear-projection; LCoS rear-projection; and DLP and other projectors. 

• Types of storage devices—VCRs; DVRs (removable media); PVRs (non-removable 

media) and variations (PCs, game players, hand-held devices). 

• Types of interfaces between devices—composite analog; component analog (SD); 

component analog (HD): DVI/HDMI; Firewire; USB; wireless variations; and associated forms of copy protection which triggers only for certain programming. 

These features and facilities represent essential progress. But the availability of 

such a wide array of features requires retailers and manufacturers to provide increased customer guidance. Consumer electronics retailers serve our customers best 

by trying to ‘‘qualify’’ the customer—ascertain his or her needs and wants, home 

room size and space, viewing and recording practices, potential for a home network, 

and budget. We then proceed through a series of questions. What is your programming preference? How do want to receive it—off air, cable, ‘‘telco,’’ satellite, Internet? Do you want the option of moving programming throughout the house? What 

devices do you already have? How many of those would you like to keep? How important is sound; do you want all your products linked to a home theater receiver 

and speakers? Do you know about HDTV? Will you want to record HDTV? The sales 

associate then identifies the combination of display formats and features, signal acquisition choices, and home network options that give the consumer what he or she 

needs. Today, unless the consumer has already firmly decided upon a specific purchase—and with the aid of Internet research, many have—retailers can not serve 

the consumer by offering products on an isolated basis. Retailers must determine 

how all of the devices will fit together and to do this the retailer has to consider 

the whole picture. 

The CERC Guide to the DTV Transition 

CERC members have continually updated their consumer information, in our 

product displays, advertising, and websites, to explain to consumers the sometimes 

dizzying array of choices in this transitional environment. We have also worked 

with the FCC and the Consumer Electronics Association (CEA) to develop, publicize 

and distribute a ‘‘DTV Tip Sheet’’ with core information about digital television 

products and services. 

In June, CERC released a 3-page consumer guide, What You Need To Know About 

The ‘‘DTV Transition’’—A Dozen Questions & Answers, to address the more particular issues that arise from the planned end to analog broadcasts. 2 CERC’s press 

release that accompanied the Guide said: 

‘‘[W]e thought we should assemble for consumers what is now known about the 

prospects for analog TV broadcasts to be shut off. and what this may mean for 

them. We’ve tried to put together answers to the most basic questions, but not 

to mislead consumers by omitting future options or considerations. At the moment there’s no way to do this in less than three pages of print. We’d prefer 

to have a shorter piece with fewer variables, but we don’t want to tell customers 

anything that’s inaccurate or incomplete.’’ 3

CERC also invited anyone who thinks the Guide is inaccurate, incomplete, or 

could be condensed, to propose changes to be incorporated in future releases. The 

key to cutting down the number of variables, however, lies in definitive action by 

the Congress on the issues that give rise to the present uncertainties. 

Text and Placement of Label for TV Receivers Lacking Digital Tuners 

CERC’s specific suggestions as to any mandatory point of display labeling requirements—once a ‘‘hard date’’ has been set—are as follows: 

Text. The label should be as concise as possible, while not misleading the consumer or unnecessarily driving him or her to more expensive products. Based on 

our experience as retailers, we are concerned that too long a label will not be read 

by many consumers. We want any advisory label to be readily understood when 

placed on or near a product on a retail shelf. So, if there is to be an advisory label, 

CERC has proposed one (subsequently endorsed by the CEA) that consumers would 

be likely to read and understand: 

150 

4 CERC believes that a display requirement of a label ‘‘in the vicinity’’ of the product on the 

shelf is more realistic than the ‘‘adjacent to’’ language of the House Staff Draft—depending on 

how ‘‘adjacent’’ is interpreted, this might not be possible without blocking other important information or features of the product or of another product on display. 5This has also been discussed as ‘‘down-conversion,’’ which CERC believes to be an unnecessarily freighted term. Sustaining a previously received analog broadcast service to a consumer, 

via conversion from digital, actually is likely to result in an improvement in the received signal. 

A ‘‘down-conversion’’ occurs only if the broadcast signal is not also passed along as a digital simulcast (as it generally is today) in its original resolution. 

Notice: This TV has only an ‘analog’ broadcast tuner so it will require a converter box after [date] to receive over-the-air broadcasts with an antenna, because of the transition to digital broadcasting on that date. (It should continue 

to work as before with cable and satellite TV systems, gaming consoles, VCRs, 

DVD players, and similar products.) 

Placement. The label should he packed with or affixed to the television receiver, 

so a retailer would have the choice of leaving the label on the set for shelf display, 

or moving it to the vicinity of the set (so as not to cover the screen). It should also 

be printed on the outside of boxes. 

• The labels should be packed with the covered TV receivers, to reduce uncertainty and to avoid mistakes, at retail, about the products to which the labels 

apply. To avoid screen damage upon removal by a retailer or consumer, the 

label should not necessarily have to be ‘‘on the screen’’ so long as it is attached 

to the product as shipped. 

• The retailer should be able either to leave the label on the product for shelf display, or move this label to the vicinity 4 of the point of product display. If a label 

is affixed to a screen, it should not necessarily have to remain there, as this 

could make it difficult for consumers to compare products. 

• The label text should also be printed on the outside of the retail boxes for the 

products to which it applies, because some retailers display TV products only 

in the closed boxes. Requiring that these boxes be opened could lessen a consumer’s confidence that he or she is receiving a factory-fresh product. 

• We believe that Internet-based sellers (including our own sites) should have 

equivalent ‘‘labeling’’ obligations at their own ‘‘point of display’’ for the product, 

or, if there is no ‘‘display,’’ at the point of sale. 

Subscription Carriage of Local Digital Broadcasts 

Much of the discussion of alternatives in the CERC Guide arises from uncertainty 

as to whether, and to what extent, local digital broadcasts will be carried to consumer homes by subscription services such as cable and DBS. CERC has no position 

on the ultimate outcome of the heated, ongoing debate between the broadcast and 

cable industries on this score. Some elements pertaining to such carriage, however, 

seem to be widely agreed upon in principle: 

• That many consumers—up to half of all cable subscribers—now watch broadcast 

channels, without aid of either a set-top box or an antenna, via the analog carriage of analog broadcast signals over cable to consumers’ homes, where these 

signals are directly tuned by the analog tuners of these consumers’ TVs. 

• That it is possible to maintain this carriage, even after analog broadcasts cease, 

via the tuning of the equivalent digital local broadcast at a cable ‘‘headend,’’ and 

the conversion or translation 5 of that broadcast into an analog transmission for 

carriage to these consumers’ homes, exactly as occurs today. 

• That it is more efficient, in a community of, e.g., 200,000 such viewers, for this 

conversion to occur once, at the cable headend, rather than 200,000 times—once 

in each consumer’s home. 

• That in order for these ‘‘basic cable’’ consumers to be able to receive such carriage as they do today, without leasing a set-top box, they will need TV receivers with analog tuners—a point that is often overlooked in discussions of why 

there remains a legitimate consumer demand for TV receivers with (only) analog tuners. 

CERC believes that the highly nuanced debate about the circumstances and obligations adhering to such carriage produced a somewhat confusing record in the July 

12 hearings. It believes that there is actually no serious controversy about the basic 

points laid out above, and that these points should be clearly understood as a basis 

for legislative determinations. 

151 

6We have found the mandate to equip 50 percent of all displays of 36 inches and above with 

digital tuners to be particularly counterproductive. By rationing the ultimate supply of products 

without such tuners, it has encouraged retailers to secure their supplies by ordering these products up-front, and to await price cuts on the products that contain tuners, because manufacturers will be required to sell these whether or not there is a demand for them. Such demand will 

be limited because, while many consumers may need or want terrestrial tuners in their displays, 

most of our customers are cable and satellite subscribers who might not need or want to pay 

for a broadcast tuner. 7 A ‘‘Television Receiver’’ is a product having an off-air broadcast tuner and antenna terminals. The Tuner Mandate requires only that products with analog off-air tuners must have digital off-air tuners as well. A consumer display product, such as a PC monitor, may have a variety of interfaces to accept both analog and digital television signals from cable, satellite, or other 

set-top boxes, yet lack any off-air tuner, so it is not a ‘‘Television Receiver.’’ 

Obligations on Other Industries 

Broadcasters should be obliged to make consumers aware of their digital channels 

and of the Transition. CERC. like CEA. has been disappointed with the lack of effort 

to date on the part of broadcasters to educate the consumer about the DTV Transition, and was pleased to hear, on July 12, a commitment by NAB to do so, as well 

as NAB’s endorsement of a January 1, 2009 ‘‘hard date.’’ These steps will be a welcome change from newspaper advertisements apparently aimed at further confusing 

the public about the transition by saying or implying that viewers would necessarily 

have to buy a new TV receiver after the transition date. That this is not the case 

was amply demonstrated at the July 12 hearings. 

CERC hopes that broadcasters will join in our effort to give consumers a full and 

candid view of their options, as they appear now, and as they will appear once the 

Congress has set a real transition date and has determined what the broadcast carriage rules will be. In the meantime, retailers have every incentive to offer consumers their most fully-featured products, rather than the less fully featured products that often have lower profit margins. But retailers also are obliged to serve, 

first and foremost, the actual needs of the customer, which vary greatly according 

to circumstance and preference. 

The ability of retailers to sell products with integrated broadcast tuners is not 

helped by the fact that most broadcasters are not airing their digital channels at 

full power, or conspicuously promoting their digital channels through on air or print 

advertising. It is in our interest to sell products with DTV tuners, but we need help 

from the broadcasters in interesting our customers in buying them. 

Provisions Re ‘‘Tuner Mandate’’ 

Thus far, under the FCC’s ‘‘Tuner Mandate’’ regime, our experience has been that 

a government mandate trying to force all shoppers to buy features that many or 

most do not in fact, need can be counterproductive to the success of the Transition.6

We therefore caution against trying, in this legislation, to use a government mandate rather than the ‘‘hard date’’ itself as the main instrument for influencing supply and demand. In particular, we are concerned about provisions that would run 

ahead of feasible design, engineering, and production cycles: 

• They would likely drive the market toward products with no off-air tuners at 

all; 

• They would deny useful products to those consumers least able to afford television receivers; and 

• They would be inconsistent with, and detract from, the provisions (as discussed 

above) that recognize cable headend conversion to analog transmission as meeting Transition requirements. 

The FCC’s Tuner Mandate has proved a fragile instrument for driving the television receiver market toward the inclusion of DTV tuners. Even the requirement 

that 100 percent of a size category of television receivers must include DTV tuners 

can have only limited impact on consumer choices, because not all video display 

products are ‘‘television receivers.’’ 7 In an era in which more than 85 percent of 

households are connected to cable or satellite, the hard fact is that most consumer 

displays for video programming may not need to be ‘‘television receivers’’—that is, 

the displays meet consumer needs without relying on any TV tuner, analog or digital, because they receive their programming from a cable, satellite, or other set-top 

box over non-broadcast interfaces. 

CERC would oppose, in particular, any provision that would move the existing 

FCC Mandate date for televisions with screen sizes of 13 through 24 inches, and 

other products containing television tuners (such as VCRs, ‘‘PVRs,’’ and DVD recorders), up to a date any earlier than March 1, 2007, because it would likely destroy, 

152 

8See Zoran May 16, 2005, ex parte letter in FCC Docket No. 05–24. 9We had hoped that prospective inclusion of the ‘‘CableCARD’’ feature, which can be inexpensively added to products with DTV tuners, would heighten their appeal to consumers, but unfortunately these products are not being promoted by the cable industry, and issues have been 

raised as to their technical support. Of the approximately one million such TV receivers sold 

to date, only about 40,000 are being served by CableCARDs. 10TV manufacturers have been fully engaged in phasing DTV tuner capacity into their larger 

products first, in accordance with the existing FCC mandate. Their necessary engineering, design, and production resources are still engaged in this effort and cannot instantly be turned 

to the separate engineering and production requirements posed by different and smaller chassis 

products. 

rather than enhance, these product categories. Such a provision would damage both 

the transition and the least-affluent portion of the viewing public. 

• First, these sets are very severely affected by price considerations. A consumer 

who buys a $69 13-inch color television is generally moved by necessity, more 

than by a search for the most compelling experience. CERC’s general retail 

members have noted that many of these sets are bought on layaway, by customers who do not have bank accounts. Even semiconductor maker Zoran, 

which has no retail experience and has made predictions based on assumptions 

that are at best aggressive and at worst unrealistic, admits that adding a DTV 

tuner in the timeframe now under discussion would increase the cost of such 

a product by ‘‘around $80–$100 depending on the brand and model.’’ 8 Having 

the price of a $69 color TV go to $169 by July 1, 2006, would eviscerate the lowend of this product category, punishing the consumers who are least able to afford television receivers. 

• If small TVs become too expensive for their market, the only alternative would 

be product lines of ‘‘receivers’’ with no off-air tuners at all. We have seen this 

class of ‘‘monitor’’ product emerge already in the large-screen category, even 

though the DTV tuner is a much smaller component of the cost of a large-screen 

television. A 22 inch LCD display with no tuner, for example, could be an alternative for a consumer who relies on a cable or satellite set-top box anyway.9

• Driving analog tuners out of inexpensive televisions seems especially counterproductive in light of the expectation, discussed above, that cable operators will 

convert DTV broadcasts to analog broadcast transmissions at their headends, 

so that consumers with analog tuner TVs will be served. If TV sets do not have 

analog tuners, there is no point in converting signals to analog at cable 

headends. ‘‘Basic cable’’ customers who rely on analog tuners to tune these 

channels will be sorely surprised when their sets have no place to plug in the 

cable. 

• The Congress, concerned as it is about consumers who must bear the costs of 

the transition, needs to confront the fact that a low-end TV with only an analog 

tuner may be the only affordable option for some consumers. To drive these sets 

out of the market prematurely, by advancing Tuner Mandate dates that double 

the prices of such sets, is to place the burden of the Transition on those who 

are least able to afford it. 

CERC has not asked that the existing Tuner Mandate dates for 13 inch receivers 

be pushed back. But we think it would be contrary to the legislation’s purposes, and 

very unfair to low-income consumers, to try to move them up. The same is even 

more true for receivers with screen sizes below 13 inches. CERC and CEA will be 

presenting evidence to the FCC that, for the smallest categories of TVs, and for 

VCRs and other small chassis devices that lack TV screens, the design, engineering, 

and production resources of manufacturers are simply not available to produce such 

products for sale by a date any earlier than March 1, 2007; and to the extent some 

might be available, the cost is likely to be prohibitive for the (largely low-income) 

consumers who define the market for such products.10

Consumer Subsidies 

CERC has not presumed to tell the Congress whether there should be such a subsidy or who should be eligible to receive it. Nevertheless, we all stand ready and 

willing to assist with our nationwide distribution abilities. But we do have a few 

concerns over how a subsidy might be applied or administered. Our core concerns 

are these: 

• Congress should not attempt to fix the prices of real-world products based on 

the funds available for a subsidy. There are too many variables, including large 

153 

11There are potential regulatory hurdles. as well. For example, California recently established 

an energy standard of 8 watts in ‘‘on’’ mode, 1 watt in ‘‘standby’’ mode for converter boxes— 

an unrealistic standard, unlikely to be met by the ‘‘converter’’ displayed during the hearing. If 

such state provisions are not pre-empted in the subsidy law they could impede acquisition of 

products or increase costs. 12These questions include: How to prevent false claims? Would all retailers, no matter how 

large or small, be audited regularly by the government? How to apply the program to Internetbased merchants; how to find them to audit the bona fides of their claims for reimbursement? 

CERC members are concerned that the opportunities for abuse presented by such a reimbursement program—as to which internal accounting data would be the only evidence of actual 

sales—would lead either to loss of credibility for all claims, or to government and retail auditing 

costs that are dramatically out of scale to the amounts being claimed. Would eligibility requirements for retailers be imposed? Would attempts be made to artificially set or define retail prices 

for particular products? Would adequate provision be made for the expenses imposed on retailers? CERC would oppose both retailer eligibility requirements and attempts to set or pre-define 

the retail price of products. Retailers should be reimbursed for their transaction and shipping 

costs, including the direct and indirect costs of audits. 

differences in the projections of costs 2 years hence, and of the number of households and sets for which there is a demand.11

• We believe that any subsidy should flow directly from the government to eligible consumers. Retailers’ role in the process should be limited to doing what we 

do best: providing the best product that fits the consumer’s needs and desires. 

However, as stated above we stand ready and willing to assist in any reasonable subsidy program. There are retailers in every neighborhood in America 

that could assist in product distribution. But the program must be sufficiently 

simple, must minimize financial risk to the retailer, and provide reasonable incentive to participate. 

• CERC would have specific concerns over a subsidy program that would require 

retailers to advance the subsidy amount to consumers, and to recover it from 

the government: 

—Any retailer reimbursement program should be a direct obligation of the U.S. 

Government for each sale of a specified product. Reimbursement within a 

standard commercial time-frame should be assured. 

—A number of specific questions with respect to eligibility, reimbursement, and 

avoiding and accounting for fraud, would need to be addressed.12

Several CERC members have been interviewed by, and voiced their views and 

concerns to, the U.S. Government Accountability Office and the Congressional Budget Office. The members of CERC know that the issue of the subsidy is a difficult 

one. While we take no position on whether there should or should not be a subsidy, 

we can provide real-world input as to how programs might operate and assist the 

Committee in avoiding purported solutions based on unrealistic assumptions. 

CERC and its members stand ready to assist the Committee in addressing any 

or all of the issues discussed in this submission. We appreciate the opportunity to 

provide this submission, and its Appendix, for the record. 

WHAT YOU NEED TO KNOW ABOUT THE ‘‘DTV TRANSITION’’— 

A DOZEN QUESTIONS AND ANSWERS

1. What is ‘‘DTV?’’ 

DTV stands for ‘‘digital television,’’ or, in this case, the broadcasting of digital television by local TV broadcasters. The signals are sent from local transmitters, overthe-air, to homes, by modern digital techniques rather than the older ‘‘analog’’ methods that are not as efficient. 

2. What is ‘‘HDTV?’’ 

HDTV (short for High Definition Television) is the highest quality form of DTV. 

Not all DTV broadcasts are in HDTV and not all DTV receivers can display HDTV. 

Broadcasts in HDTV are available only on DTV broadcast channels—they are not 

available over analog broadcast channels. (HDTV is also available from digital cable, 

satellite, and other services.) 

3. What is the ‘‘DTV Transition?’’ 

In the next few years, it is likely that over-the-air broadcasting of free TV (from 

broadcast transmitters to homes) will move exclusively to ‘‘digital’’ channels, and the 

more familiar ‘‘analog’’ channels will be switched off. Already, almost all broadcasters are using two sets of channels—the newer ‘‘digital’’ channels, and the ‘‘anaVerDate Nov 24 2008 13:48 Mar 08, 2011 Jkt 064975 PO 00000 Frm 00157 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\64975.TXT SCOM1 PsN: JACKIE
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log’’ channels that have been in use since the 1940s. It is these ‘‘analog’’ channels, 

by which you are accustomed to identifying your local broadcasters, that are being 

replaced by different, digital channels that in most cities are already on the air. 

4. Will there be any charge to receive these digital channels? 

No, broadcasts that are now free (or advertiser-supported) to consumers who receive them via antennas are expected to remain free. (It is possible that additional 

‘‘pay’’ services may be launched in the future, but these are not expected to replace 

the free services offered today.) 

5. Why will over-the-air broadcasting stop on the ‘‘analog’’ channels? 

For more than half a century, TV broadcasts have used the technology that was 

invented in the 1920s and 1930s, and refined (by adding color) in the 1950s. In 

1997, when broadcasters became interested in HDTV, and in order to find additional 

space for emergency communications and advanced services, the Congress decided 

that it was time for TV broadcasting to move to more modern and efficient ‘‘digital’’ 

techniques, which support HDTV or, alternatively, allow broadcasters to offer more 

channels to viewers. So, Congress instructed the Federal Communications Commission (‘‘FCC’’) to assign to broadcasters new ‘‘DTV’’ channels and, after a ‘‘DTV Transition’’ period, to have the broadcasters return their old analog channels. 

• Once DTV broadcasts are up and running (as they are now in many communities)—and consumers are able to receive them (which many are, particularly 

over digital cable and satellite services)—the ‘‘analog’’ channels with which most 

consumers presently identify local TV stations, are supposed to disappear. Their 

frequencies will be re-assigned for other uses through an ‘‘auction.’’ Holding an 

auction for these frequencies will free up space for new ‘‘broadband’’ and other 

communication services, and will help emergency responders to coordinate their 

communications. (Finding new frequencies for emergency communications became a high priority after September 11, 2001.) 

6. When will over-the-air broadcasting on the analog channels stop? 

Congress’s original target date was the end of 2006, but you have not heard much 

about it because this date was subject to a number of conditions—primarily, the 

readiness, as judged by the FCC, of most consumers to receive the newer digital 

broadcasts—and these conditions are unlikely to be met by the end of 2006. However, pressed by the need to ‘‘recover’’ this valuable spectrum for other uses, and 

with the facilities for digital broadcasting now well established, Congress is considering new legislation that would set a clear, definite and unconditional date for analog broadcasts to stop—the transition would have to be complete by January 1, 2009. 

7. I now subscribe to cable or satellite. Do I need to be concerned about 

an end to free, over-the-air analog broadcasts? 

You will probably not notice much change for those TVs hooked up to your cable 

or satellite service, but you might be missing out on some opportunities. Cable operators pick up most local broadcasts at a central location and send them to homes 

over cable; satellite services increasingly are able to do this as well. It is likely that 

they will continue to provide whatever free local broadcast programming they currently provide to you, even after there is this change in broadcasters’ means of transmission. However: 

• If you have TVs in your house that are not hooked up to your cable or satellite 

service, and rely on an antenna to receive conventional broadcasts, you will 

need to make alternative arrangements to keep watching these TVs. 

• In the future, cable operators might also move to ‘‘all digital’’ means of delivery, 

which could mean you would need to lease a ‘‘set-top box’’ or own a TV with a 

digital cable tuner (such as one with a ‘‘CableCARD’’ slot) to continue to receive 

the channels you now view on a conventional TV. 

• If a local broadcaster launches several new digital channels, a cable, satellite, 

or other programming service operator might not agree, or be required, to carry 

all of their local digital or HDTV broadcasts. You might, therefore, need a DTV 

or HDTV tuner and an antenna in order to receive those channels. 

8. Does my TV have a DTV tuner? What about my VCR, DVD recorder, PVR, 

DVR, etc.? 

The only televisions that have DTV tuners are those that have been sold—since 

about 1998—as having an ‘‘integrated’’ HDTV broadcast tuner (also called an ‘‘ATSC 

Tuner’’). Most of these products are also capable of displaying HDTV, so they are 

sometimes advertised or sold as ‘‘HD Built-in.’’ (A set sold as ‘‘HD-ready’’ is capable 

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of displaying HDTV but does not have a built-in HDTV tuner.) Recently the FCC 

has started requiring—on a phased-in basis—that larger TVs with ‘‘analog’’ tuners 

also be marketed with built-in or separate DTV tuners, so you should be seeing 

more and more ‘‘integrated’’ or ‘‘built-in’’ products in stores. (Some of these may be 

‘‘DTV’’ or ‘‘EDTV’’ sets that cannot display full HDTV.) 

• Separate HDTV broadcast tuner products have been available for several years. 

(You are likely to know if you have one.) Once Congress passes its ‘‘transition’’ 

legislation, you can expect to see ‘‘DTV Broadcast Converter’’ products that, 

when hooked up to an antenna, convert the new digital broadcast signal to an 

old analog signal that your older TV can tune and display. 

• Most VCRs, DVD recorders, personal video recorders (PVRs) and digital video 

recorders (DVRs) do not presently have HDTV or DTV broadcast tuners, even 

though they may record by digital means. (However, if one of these products has 

a slot for a ‘‘CableCARD,’’ it probably also has an HDTV or DTV broadcast 

tuner.) ‘‘DVRs’’ provided by cable operators do not have digital broadcast tuners 

(cable operators use a different means to transmit digital signals), but some provided by satellite operators do. The considerations for supporting these non-TV 

products are similar to those for your present TVs. 

9. What does the future shutoff of the analog channels mean to me if I am 

shopping for a new TV? 

If you plan to purchase a new TV that will rely on a rooftop or indoor antenna, 

you may want to make sure that it has an integrated (built-in) HDTV or DTV tuner. 

In fact, as noted above, FCC rules now require of TV manufacturers that any TV 

with a screen size of 36 inches or greater that has an analog broadcast tuner must 

also have a DTV broadcast tuner built-in or marketed to retailers with the set. This 

requirement is being phased-in to all sets and other products that have analog TV 

tuners. (‘‘Monitors,’’ however, such as those used with computers, need not have any 

tuner.) One bonus: Many of these ‘‘built-in’’ sets also have slots for CableCARDS 

which, when provided by your cable operator, allow you to tune premium cable channels (including HDTV channels) without needing a set-top box. This gives you an additional choice if, in the future, you might plan to subscribe to a cable service. 

• If your new set is going to be hooked up to a cable, satellite, or telephone company video programming service instead of to an antenna, you may not need 

a DTV broadcast tuner. You can expect to receive all of the broadcast channels 

that you are accustomed to watching if they are carried by this operator. However: 

—If these broadcast channels are not carried, or are not carried in full HDTV 

resolution, you will need an antenna to get the remaining local channels, and 

your set would need an HDTV or DTV tuner built-in or added on (depending 

on whether the channels you want include HDTV broadcasts and whether 

your set can display HDTV). For local information, see www.antennaweb.org. 

—You may in the future need to lease a set-top-box from your cable, satellite, 

or telephone company, particularly if your new set does not accept a 

CableCARD. 

10. What does the future shut-off of the analog channels mean to me in 

watching the TVs now in my home that are not connected to a cable or 

satellite service? 

If your TV is not currently hooked-up to an antenna (for example, it is being used 

to play video games, or to watch DVDs or camcorder movies, etc.), nothing will 

change, because only free over-the-air broadcasts will be affected by this DTV broadcast transition. If your existing TV currently relies on an antenna to receive free 

broadcast programming (and it does not have an ‘‘integrated DTV tuner’’), you will 

have several options: 

• You could subscribe to a cable, satellite, or other program delivery service that 

carries the broadcast programming in which you are interested. If you are already a cable, satellite, or other programming service subscriber, you can extend your hook-up to reach this TV. To continue to rely on an antenna, you will 

need an external ‘‘DTV Broadcast Converter’’ product. 

• If your set is ‘‘HD-ready’’ you will want a tuner that can display HDTV broadcasts in full HDTV resolution (rather than ‘‘down-converting’’ them to a Lesser 

format). 

• If your set is a ‘‘standard’’ television, you will want to obtain a ‘‘DTV Broadcast 

Converter’’ product that converts a ‘‘DTV’’ or ‘‘HDTV’’ broadcast to a standard 

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‘‘analog’’ output that your TV can receive—either as ‘‘channel 3 or 4’’ or one of 

the other standard inputs that your TV already has. The Congress is considering whether or not to assist some or all consumers in obtaining these converters, but no decision has yet been made on this issue. Relatively inexpensive 

DTV Broadcast Converter products are likely to show up in stores once the legislation has passed, and the ‘‘transition date’’ is known for sure. 

11. What else do I need to know about HDTV? 

High Definition Television, or ‘‘HDTV,’’ is the more general name for showing 

video in a new and better format—a wider screen with about 5 times the picture information. All types of video displays—conventional picture tubes, the various sorts 

of projection TVs, and the new ‘‘flat panels’’—can show HDTV if they are designed 

to handle all of this video information in the new format. You can expect a product 

to tune or display HDTV only if it was sold or advertised as such. 

• If your existing set is not ‘‘HD-ready’’ or ‘‘HD built-in’’ (‘‘integrated’’) it will not 

display an HDTV signal in full quality, even if an ‘‘HDTV broadcast converter’’ 

is attached to it. 

• If your existing set is ‘‘HD-ready’’ it should display an HDTV quality picture 

when an HDTV broadcast converter is attached (but will display only a standard quality picture from a ‘‘DTV Broadcast Converter’’ that is not advertised as 

HDTV). 

• For your existing TV that cannot handle HDTV a ‘‘DTV Broadcast Converter’’ 

should tune the HDTV broadcast channels, but provide them to your set in the 

standard quality format that your set can display. (Some, but not all, of these 

might also provide HDTV-quality signals to ‘‘HD-ready’’ sets.) 

12. What is ‘‘EDTV?’’ 

Enhanced Definition Television, or ‘‘EDTV,’’ refers to the capability of displays to 

show pictures at about the same quality level as DVDs—better than pictures from 

standard analog broadcasts, but not of the same quality as an HDTV display. For 

such a set, you might get better performance from a broadcast converter product 

that has enhanced capabilities as well. For further information on display formats, 

see the Consumer Electronics Association’s HDTV Consumer Guide at http:// 

farsight.decisionmark.com/docs/cea.pdf. 

Æ