U.S. GOVERNMENT PRINTING OFFICE

65–906CC WASHINGTON : 2000

HIGH DEFINITION TELEVISION AND RELATED

MATTERS

HEARING

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS,

TRADE, AND CONSUMER PROTECTION

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JULY 25, 2000

Serial No. 106–143

Printed for the use of the Committee on Commerce

(

COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION

W.J. ‘‘BILLY’’ TAUZIN, Louisiana, Chairman

MICHAEL G. OXLEY, Ohio,

Vice Chairman

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ROBERT L. EHRLICH, Jr., Maryland

TOM BLILEY, Virginia,

(Ex Officio)

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

BILL LUTHER, Minnesota

RON KLINK, Pennsylvania

TOM SAWYER, Ohio

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

2

C O N T E N T S

Page

Testimony of:

Campbell, Tom, Corporate Director, Ken Crane’s Home Entertainment

Centers ........................................................................................................... 40

Chapman, Gary, CEO and President, Lin Television Corporation .............. 77

Fern, Tim, Vice President, Pace Micro Technology ....................................... 79

Green, Richard R., President and CEO, Cable TV Laboratories .................. 67

Hatfield, Dale N., Chief, Office of Engineering and Technology, Federal

Communications Commission, accompanied by Deborah Lathen, Chief,

Cable Services Bureau .................................................................................. 27

Hyman, Mark, Vice President of Corporate Relations, accompanied by

Nat Ostroff, Vice President of New Technology, Sinclair Broadcast

Group ............................................................................................................. 8

Lewis, Richard M., Senior Vice President, Research and Technology, Zenith Electronics Corporation ........................................................................ 43

Miller, Matt, President and CEO, NxtWave Communications ..................... 61

Miller, Robert T., President, Viacel ................................................................ 75

Rainey, Terence J., President, Association of Imaging and Sound Technology ............................................................................................................. 80

Shapiro, Gary, President and CEO, Consumer Electronics Association ...... 18

Material submitted for the record by:

Consumer Electronics Retailers Coalition, letter dated August 2, 2000,

enclosing material for the record ................................................................. 106

Massachusetts Institute of Technology, letter dated July 31, 2000, to

Hon. Edward J. Markey ............................................................................... 128

Shapiro, Gary, President and CEO, Consumer Electronics Association,

letter dated September 1, 2000, enclosing material for the record ........... 131

Sinclair Broadcast Group, Inc.:

Supplemental testimony of ....................................................................... 102

Supplemental testimony of ....................................................................... 152

Zenith Electronics Corporation, letter dated September 6, 2000, enclosing

material for the record ................................................................................. 144

(III)

(1)

HIGH DEFINITION TELEVISION AND RELATED

MATTERS

TUESDAY, JULY 25, 2000

HOUSE OF REPRESENTATIVES, COMMITTEE ON COMMERCE, SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION, Washington, DC.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room

2123, Rayburn House Office Building, Hon. W.J. ‘‘Billy’’ Tauzin

(chairman) presiding.

Members present: Representatives Tauzin, Oxley, Stearns,

Gillmor, Shimkus, Pickering, Fossella, Ehrlich, Markey, Eshoo,

Wynn, Luther, Sawyer, Green, and McCarthy.

Staff present: Mike O’Rielly, majority professional staff; Cliff

Riccio, legislative clerk; and Andy Levin, minority counsel.

Mr. TAUZIN. Good morning. The committee will please come to

order. We would ask our guests to take seats and be comfortable.

I want to take a moment before we get started this morning to

welcome some students from my home district and my alma mater,

Harvard on the Bayou, Nicholas State University. Would you

please welcome the Free Enterprise students, the winners of the

Free Enterprise Program at Nicholas State University. Would you

please welcome their attendance today?

Welcome to this morning’s hearing regarding high definition television and the myriad of issues surrounding our nationwide transition to digital. The rollout of HDTV is a very important issue to

this committee, and I am looking forward to today’s discussion. We

have a lot of testimony to hear.

We have assembled an amazing panel of 11 very prestigious witnesses today. My apologies for the shoulder-to-shoulder situation

here, but I learned a long time ago that two panels don’t work on

these serious issues. If we put you all together, we can generally

get a good give-and-take.

We are going to hear, of course—also see a number of technical

demonstrations today, and so I am going to keep the remarks as

brief as I can. I am going to ask members to do the same thing.

In 1996, we generally endorsed the Reagan administration’s plan

to allow the television broadcast industry to make a transition from

analog television to digital. We afforded each incumbent television

broadcast licensee an additional channel, basically 6 megahertz of

spectrum that can be used during this transition.

Despite the flexibility provided in the transition framework, it

now seems quite possible that industry will not meet the FCC’s

2

conversion timetable. Some suggest this can be attributed to uncertainties over technological standards as they relate to the transmission of digital signals. The incompatibility between HDTV sets

and cable systems and/or the overall software problems encountered by the set-top box manufacturers. Yet others have suggested

that some broadcasters have no ultimate intention of rolling out

HDTV but instead are looking to sell off the bulk, if not all, of their

6 megahertz of spectrum.

Whatever the reasons for the complications, we are generally

concerned that we will not meet our goal for digital broadcasting

in our top 40 markets, much less markets not so inclined to receive

full digital signals before the year 2006.

As a result, we have assembled this very large, very qualified

panel ranking from broadcasters, television networks, engineers,

cable providers, retailers and producers to help us get to the bottom of the number of important questions that I and many members have about the transition to digital television in the U.S.;

namely:

Why rollout across the country appears, at least at this stage, to

be less than uniform; Whether some broadcasters intend to sell off

some of their allotted 6 megahertz of spectrum for windfall profits,

which of course was never intended by Congress.

Which technological modulation standard for HDTV is better, the

8-VSB or the COFDM; Whether America’s cable systems and networks are having interoperability problems with HDTV systems

and sets and whether such problems have any substantial implications for digital must-carry; and, finally, what retailers across the

country are experiencing with respect to the sale of new television

sets and set-top boxes.

With these issues serving as a basic frame of reference outlining

the direction in which I would like the hearing to go today, I will

yield back the balance of my time and look forward to hearing from

this esteemed panel of witnesses and yield to my friend, Mr. Markey, for an opening statement.

Mr. MARKEY. Thank you, Mr. Chairman, very much.

This is a historic day. It is the first day we have ever had a computer testify before our committee. And this demonstration over

here of an HDTV set, the big issue has always been, could you get

it in your living room; and now it turns out you have to get the

antenna in your living room as well. So we are probably trying to

move, but we have made great progress in 13 years, without question, in this issue area.

I want to thank you all so much for coming here today. This subcommittee has a long history of working on this issue which began

with the hearing on HDTV in 1987, a hearing with the top executive in Japan showing us what their technology had already accomplished and which continued as the technology evolved into digital

television. The evolution of HDTV from a foreign analog technology

into an American digital technology is one which this subcommittee

closely monitored and at times prodded the Federal Communications Commission and the various industry participants toward

progress.

In addition, it became increasingly clear over time that the DTV

standard-setting endeavor at the FCC was more than about simply

3

creating prettier pictures, but rather encompassed a national plan

to get the broadcast television industry into the emerging digital

domain in a more robust multimedia way.

The result of that effort is a standard that is highly versatile. A

broadcaster can use it to show one channel or several channels of

video programming at different frame rates, in interlaced format or

in the more commuter-like progressive format. All broadcasters can

use a portion of the bit stream for enhanced data services.

Today, we return to assess progress in the transition, and this

morning, we will hear allegations that the DTV standard is flawed.

Whether the standard is flawed or not is not a policy issue, but

rather an engineering issue. At this point, there does not appear

to be any consensus among engineers as to the level of importance

to associate with any performance measure for indoor reception of

the current standard.

The policy issue is whether there is significant justification or

benefit to changing course at this moment or embracing delay in

order to more fully explore the issue.

A little over 2 years ago, the subcommittee also held an oversight

hearing on the digital TV issue. We still have the leftover issues

from that last oversight hearing in the previous Congress. Those

issues implementing cable must carry rules, the lack of sufficient

digital programming from content producers, the lack of progress

on promoting a competitive set-top box marketplace, the public interest obligations of digital broadcasters, and whether the broadcasters have any obligation to offer HDTV at all or can simply blast

data services to the public remain as issues for today as well.

In the midst of all this, we are now set to embark upon the first

of a series of very ill-considered, budget-driven spectrum options of

the broadcasters’ analog spectrum as mandated by Congress. According to that directive, the FCC is supposed to auction off spectrum in the areas now occupied by Channels 60 to 69. Obviously,

stations occupying those channels have yet to leave and are unlikely to vacate such spectrum any time soon, at least not unless

they are heavily compensated for leaving.

In addition, we are also scheduled to sell the rest of the analog

spectrum even though there is no longer a soul in the industry who

thinks this transition will be over by the year 2006.

In 1997, during the budget deliberations, I offered an amendment in this committee based upon the 1962 All-Channel Receiver

Act. That spurred the development of the UHF television industry

to ensure that starting next year, the year 2001, all TV sets in the

United States had to be at least capable of displaying a digital signal. That amendment wasn’t adopted, and as a result, we will continue to talk about the national need to recapture the analog spectrum at the earliest possible date and policymakers will be wringing their hands about the slowness of the transition, even as consumers continue to purchase analog-only receivers through the

year 2006, but remembering that in 1997 it was the industry that

killed the amendment which would have mandated that every television set, by the year 2001, sold in the United States had the capacity to receive a digital signal even if it was an analog set.

So this, ladies and gentlemen, is the moment at which we have

arrived, pretty predictably, given the course of events over the last

4

3 or 4 years. And I hope throughout the course of the day we might

be able to find from our witnesses what the best course is to take

from this point on. Thank you.

Mr. TAUZIN. Thank the gentleman. The Chair recognizes the vice

chairman of the committee, the coach of the Republican baseball

team this week, Mr. Mike Oxley.

Mr. OXLEY. Thank you, Mr. Chairman. The tension builds as we

work toward tomorrow night. We would expect, of course, everybody within the sound of my voice to be attending that game and

root for whomever you want. We would like to have you there. And

we’d like to have your money for charity.

Mr. TAUZIN. Good pitch.

Mr. OXLEY. Mr. Chairman, I thank you for calling this morning’s

hearing on DTV conversion. I am pleased to see that the subcommittee is conducting rigorous oversight on spectrum management practices.

DTV holds enormous potential for American consumers and

American businesses alike. There are a lot of exciting technologies

competing for attention in the marketplace, and that is how it

should be. I reviewed the testimony, which is in all cases thoughtful and most interesting.

I do find it a little ironic that our broadcaster friends, while insisting on maximum flexibility for themselves and how they utilize

their additional free spectrum, are demanding mandates on cable

operators and set manufacturers—and, by extension, their customers—to accelerate the acceptance of digital television. An allsignal reception mandate for set manufacturers and simultaneous

analog and digital must carry regulations for cable systems are

ideas whose time has not come, in my opinion.

Those are matters to be settled between industry and consumers.

I am not sure that there is a role for the Federal Government. My

advice is: trust the market.

We all knew perfectly well that the time lines we were setting

for digital conversion were unrealistic when we put them in place.

It was publicly noted at the time by Members on both sides of the

aisle, myself included. As anxious as I am to see the analog spectrum return and brought to the marketplace, I don’t see any point

in kidding ourselves about when it is going to happen.

Also, with respect to digital must carry, I am looking forward to

a resumption of the Cox-Markey dialog on ‘‘must carry’’ rights and

local content undertaken during consideration of the rural loans

bill. While the ‘‘liberal-left, libertarian-right coalition’’ never quite

struck the right balance, all of us have to admit that it is an interesting discussion, and I look forward to more of it.

I yield back.

Mr. TAUZIN. I thank the gentleman.

Further requests for opening statements?

The gentleman from Ohio, Mr. Sawyer.

Mr. SAWYER. Mr. Chairman, honoring your request that we keep

our statements short, just let me say thank you for calling this

hearing. If I were to put our inquiry today into three succinct arenas, it would come down to how are we doing so far, are there technological or policy impediments that are standing in the way of our

getting where we are to where we need to go, and are there actions

5

to be taken in this forum or some other forum to facilitate this

transition? I hope that we can talk about those topics, among others, today.

I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman.

The gentleman from Illinois, Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman.

In keeping with the hearing, I will be short, but I did bring along

my expert TV analyst, my son David, who is awaiting high definition TV for Pokemon. And we look forward to that.

Two other things to note, that Harris Communications manufactures the 8-level vestigial side band, 8-VSB, in my district; or—I

have portions of the city of Quincy, WGM Quincy, Illinois, is one

of the smallest public—I mean, broadcasters to be now broadcasting in high definition TV in Quincy, Illinois. We are excited

about that.

And I look forward to the hearing and seeing progress across the

Nation. With that, I yield back my time.

Mr. TAUZIN. I thank the gentleman.

Further requests for opening statements? Neither side.

Then the Chair is pleased to welcome our panel. Let me first

make unanimous consent that all members’ written statements be

made a part of the record. Without objection, so ordered.

[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. TOM BLILEY, CHAIRMAN, COMMITTEE ON COMMERCE

Mr. Chairman, thank you for calling this hearing today.

Today’s hearing is focused on an important subject matter that this Committee

has been following for years. In fact, it troubles me to say that. It is troubling to

be here debating this topic given the enormous work we have already done here.

At the beginning of this Congress, I hoped that we would not have to hold a hearing on H-D-T-V. I hoped that the marketplace was going to decide the fate of this

technology. I hoped that consumers would be given the chance to accept or reject

HDTV on their own. I had hoped that there would be no need of another flashy

demonstration of what ‘‘could be.’’ Sadly, that did not turn out to be the case.

At this particular time, the picture of HDTV still has some analog snow. There

are disagreements at the FCC and within the industry over HDTV. Not only do

these issues stall the sale of new television sets, but these internal squabbles prevent digital television from becoming a reality.

You might say these issues are like the Woodrow Wilson bridge in Alexandria.

The fighting over a new bridge continues until the old bridge collapses. I say resolve

these issues and lets finally see if the marketplace has any interest in this technology.

I applaud all of the manufacturers, retailers, and broadcasters striving to get this

technology out to consumers. In some respects, all we hear about are the negatives

of digital television. In reality, digital televisions are selling at a quick pace. I hope

that this continues.

Let me briefly address one outstanding issue. Many parties are discussing the use

of the HDTV spectrum to offer supplemental or extraneous services. Some broadcasters would rather use the spectrum which Congress gave to them for free, to offer

datacasting and other wireless-type services. Indeed, it has been proposed that one

reason we are having this debate over which standard to use is because one standard permits greater ancillary services. I think that these broadcasters have been

watching too many episodes of ‘‘Who Wants to be a Millionaire.’’

Let me be abundantly clear to the broadcasting community: You asked that Congress provide you with an opportunity to offer HDTV. We did that. Now some of

you are getting cold feet. If you want to offer other services with the HDTV spectrum, you should pay for it, like you would in an auction.

In fact, as the FCC considers and reconsiders what to charge such broadcasters

for using the spectrum for other purposes, I recommend that the value be pegged

to the price paid for 3G licenses in Britain. This is a highly valuable spectrum and

6

its price should match its value. If some broadcasters are willing to pay this as if

they are traditional wireless companies, so be it. If the FCC sets the value too low,

then the FCC should expect to see a request to appear before this Committee for

a discussion.

Moreover, there has been talk of broadcasters trying to leverage the timing of

their exit from the old analog portion of their licenses for some financial benefit.

This is pure nonsense.

Broadcasters are merely one side of the equation in the transition to digital television. If we learn that some broadcasters are withholding digital programming and

thus falsely extending the digital transition, then the Committee should revisit the

standard in the Balanced Budget Act of 1997 or prepare additional penalties for

broadcasters that would not harm consumers.

It would be a mockery of the laws passed by this Congress to allow the broadcasters to create secondary markets for the spectrum they should return to the FCC

as soon as possible. America’s wireless industry seeks to use this spectrum to offer

new services. The wireless industry should not be held at the mercy of a broadcaster

unwilling to exit the band.

Thank you, Mr. Chairman.

PREPARED STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Thank you Mr. Chairman.

During the administration of President Reagan, the FCC initiated a plan that

would allow the television broadcast industry to make a transition from analog to

digital television.

In 1996, the Telecommunications Act brought this picture into sharper focus. The

Act provided the FCC with guidelines to regulate the additional spectrum that

broadcasters were given for use during the transition period.

Today, we’re working toward a target date of 2006 before the broadcasters will

hopefully have completed the transition to digital television in certain markets. Not

until then will the FCC be able to reacquire the analog spectrum and assign it to

the highest bidders at an auction to be conducted later this year.

I recite this timeline because even after such a substantial period of time has

been devoted to HDTV, I see now that we are faced with even tougher issues which

must be resolved before we can get this technology to the public.

We must resolve these issues—but we should do so with the assistance of the industry. I’m pleased that the Consumer Electronics Association (CEA) and the National Cable Television Association (NCTA) have worked together to resolve some

difficult matters, and I encourage all parties to engage in similar efforts with regard

to remaining issues

At the same time, I believe that at least some of the problems in this arena will

be solved as the available technology improves.

One of the larger issues facing us relates to which digital standard should be

used. To that end, we may have to decide whether the question is resolved by opening the marketplace to competition between the two standards, or by assessing the

ramifications of delay at this juncture. Moreover, we should consider whether we

are creating unnecessary delay in the technology before it finally reaches the consumer.

Considering how far along we are in the HDTV process, certainly some relevant

inquiries are (1) ‘‘why are we questioning the applicable standard after a thorough

analysis was already performed?’’ (2) ‘‘if we change standards, how will a two to four

year delay effect this industry,’’ and (3) ‘‘what will happen to the investments in digital programming and equipment that have been made to this point?’’

Above all, however, after considering all the facts, let’s get it right. In striving to

achieve that goal, I look forward to the information our panel of witnesses can provide for us.

PREPARED STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS

Mr. Chairman: I appreciate this opportunity to address some of the problems dealing with the national rollout of HDTV.

I want to begin by saying I am very concerned the FCC is not exercising proper

oversight during the transition from analog to digital television.

7

The FCC sends out press releases touting the number of new stations broadcasting a digital format, but neglects to mention that almost no one is watching the

new signal.

Digital television, and HDTV in particular, is supposed to provide viewers with

an enhanced quality picture resolution and sound capability.

However, consumers have been extremely slow in beginning the switch from their

old analog televisions sets to new digital versions.

The FCC has indicated that 2006 is the target date when broadcasters are supposed to begin returning their analog spectrum for reallocation.

Mr. Chairman, that target date is not going to be met.

The FCC has pushed our broadcasters to upgrade to a digital format that now

may not be able to penetrate the walls of an average house.

In addition, the FCC appears to be doing little to harmonize the technology needed to allow the digital broadcast signal access to our nation’s cable systems.

The FCC is allowing almost any issue dealing with HDTV to drift among competing parties without even attempting to provide guidance.

Mr. Chairman, hundreds of millions of dollars have already been expended in rolling out digital television throughout the country, but when are we going to have

something to show for our effort.

Our broadcasters did their job and got the digital signal up and running.

Now the question is can consumers receive it without having to purchase expensive accessories.

As with all household electronics, consumer acceptance is critical.

I am looking to today’s panel for evidence that the technology laid out by the FCC

works and that consumers will be able to receive this new signal at a reasonable

price.

I am sure everyone here today remembers the Betamax VHS debate when Video

Cassette Recorders first came out.

Competition in this instance was beneficial because consumers decided which

technology would become the standard.

There are competing digital formats, but the FCC has chosen to elevate one format over the others and I want to make sure that the they did not pick the

Betamax equivalent for HDTV.

I would like to hear from today’s panel on when they believe consumers will begin

switching over to HDTV in large numbers.

And if anyone can suggest steps the FCC could take to help streamline this conversion process, I, along with the rest of the Subcommittee, would be very interested.

Mr. Chairman, we can throw millions of dollars at providing a digital broadcast

signal, but if consumers lack the infrastructure to receive that signal, then digital

is going to vanish into thin air.

Thank you Mr. Chairman and I yield back the balance of my time.

Mr. TAUZIN. Second, I ask that all our panel members’ written

statements be made a part of the record without objection. It is so

ordered.

I was just remarking to my friend, Mr. Markey, that the one nice

thing about a computer testifying is we can probably keep the computer within the 5-minute rule. The challenge will be to keep the

rest of our panel within the 5-minute rule.

We have 11 members of the panel. We have some demonstrations. So you notice the members have been very good about keeping their opening statements short, staying within the 5-minute

rule. There is a timer device somewhere on the desk in front of you.

It will light up green and then yellow and red. When red is on, it

is time to wrap up; so wrap it up as quickly as you can.

Let me quickly introduce the panel. Then we will go to those who

will make demonstrations so we can get the demonstrations done

as quickly as possible: Mr. Dale Hatfield, Chief of the Office of Engineering and Technology of the Federal Communications Commission, is with us today and is accompanied by Deborah Lathen,

Chief of the Cable Services Bureau; Mr. Richard Lewis, Senior Vice

President of Research and Technology of Zenith Electronic CorporaVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
8

tion; Mark Hyman, the Vice President of Corporate Relations of

Sinclair Broadcasting; Gary Shapiro, President and CEO of Consumer Electronics Association; Gary Chapman, CEO and President

of LIN Television Corporation; Richard Green, President and CEO

of Cable TV Laboratories; Matt Miller, who is President and CEO

of NxtWave Communications; Robert Miller, who is President of

Viacel of New York; Tom Campbell, Corporate Director of Ken

Crane’s Home Entertainment Centers; Tim Fern, representing Pace

Micro Technology, Director of Engineering of that company; and

Terence Rainey, President of the Association of Imaging and Sound

Technology here in Vienna, Virginia.

We will start with Mr. Mark Hyman, Vice President of Sinclair

Corporation, who I understand has a demonstration for us. Mr.

Hyman is recognized.

STATEMENTS OF MARK HYMAN, VICE PRESIDENT OF CORPORATE RELATIONS, ACCOMPANIED BY NAT OSTROFF, VICE

PRESIDENT OF NEW TECHNOLOGY, SINCLAIR BROADCAST

GROUP; GARY SHAPIRO, PRESIDENT AND CEO, CONSUMER

ELECTRONICS ASSOCIATION; DALE N. HATFIELD, CHIEF, OFFICE OF ENGINEERING AND TECHNOLOGY, FEDERAL COMMUNICATIONS COMMISSION, ACCOMPANIED BY DEBORAH

LATHEN, CHIEF, CABLE SERVICES BUREAU; TOM CAMPBELL,

CORPORATE DIRECTOR, KEN CRANE’S HOME ENTERTAINMENT CENTERS; RICHARD M. LEWIS, SENIOR VICE PRESIDENT, RESEARCH AND TECHNOLOGY, ZENITH ELECTRONICS

CORPORATION; MATT MILLER, PRESIDENT AND CEO,

NxtWAVE COMMUNICATIONS; RICHARD R. GREEN, PRESIDENT AND CEO, CABLE TV LABORATORIES; ROBERT T. MILLER, PRESIDENT, VIACEL; GARY CHAPMAN, CEO AND PRESIDENT, LIN TELEVISION CORPORATION; TIM FERN, VICE

PRESIDENT, PACE MICRO TECHNOLOGY; AND TERENCE J.

RAINEY, PRESIDENT, ASSOCIATION OF IMAGING AND SOUND

TECHNOLOGY

Mr. HYMAN. Thank you, Mr. Chairman.

Do you want the demonstration first?

Mr. TAUZIN. Yes.

Mr. HYMAN. I would like to call forward Mr. Nat Ostroff, who

will be conducting our actual demonstration.

Mr. TAUZIN. Those of you who have demonstrations, it will not

be assessed against your 5 minutes. So we will proceed with the

demonstrations first and then get the testimony in.

Mr. OSTROFF. Thank you for the opportunity.

Mr. TAUZIN. Please identify yourself for the record.

Mr. OSTROFF. My name is Nat Ostroff. I am Vice President of

New Technology at Sinclair Broadcast Group.

We have a short videotape which will be displayed on the screen

in the back, which describes some of the efforts made to illustrate

the differences in reception of the two transmission technologies

that are in debate today. After that, we will have a short, live demonstration as well.

So, if possible, we could go to the videotape and roll that, and

then we can go to the live demo.

Mr. TAUZIN. Let’s do that. If you will roll the videotape.

9

[Videotape played.]

Mr. TAUZIN. I understand now you will do a live demonstration.

Mr. OSTROFF. Yes.

What you saw in that attempt, to take away from that, is the

fact that the stations that were received, the antenna was not

pointed in the same direction for each station, which means—at

least in that experiment—that any channel changing would require

antenna readjustment.

What I want to show you now——

Mr. TAUZIN. I want to stop and ask you something.

The antenna you demonstrated was an indoor set-top box antenna, as opposed to the large antennas that are normally found

for television outdoors?

Mr. OSTROFF. That is correct. I would say, of the 250 million TV

sets in use today, 40 percent of them are not connected to cable or

satellite and the vast majority of those are relying on rabbit ears

or loop antennas in the broadcasters’ prime coverage area. So we

are dealing with small, simple antennas to get analog.

Mr. TAUZIN. Tell us what you will do in the live demonstration.

Mr. OSTROFF. What we have done—for live demonstration, I

want to show that we can receive a COFDM-based signal from

WRC here in Washington with the bow-tie antenna sitting on the

witness table. And the point being made is, it is not necessary to

point the antenna out the window. As you will find out today, in

8-VSB, it doesn’t need to be critically adjusted. It was dropped

down on the table. I would walk around the room with it, and we

could receive high definition television.

I want to point out it is at a data rate that is higher than the

data rate in ATSC, so there is no attempt or no reason to reduce

the data rate in order to get robustness of reception with simple

indoor antennas.

Mr. TAUZIN. Would you do that?

Mr. OSTROFF. We are going to actually turn the receiver on and

display what we are receiving off that bow-tie antenna.

The video is on a loop. And, of course, naturally the loop ends

just as we start the demo. It takes about 7 seconds or 8 seconds

to restart; it will in just a moment.

Mr. TAUZIN. So we understand what we are seeing, this is an actual broadcast?

Mr. OSTROFF. This is an actual broadcast over the air right now

instantaneously being received from WRC in Georgetown with the

bow-tie antenna sitting on the witness table.

Mr. TAUZIN. That is the small antenna we are looking at here.

Mr. OSTROFF. That is the small antenna we are looking at. That

could probably be replaced with something even smaller, but for

purposes of the demonstration, you can buy that for about $1.98 at

Radio Shack.

Mr. TAUZIN. This is using the COFDM?

Mr. OSTROFF. This is using the COFDM modulation system that

is incorporated in the DVB-T standard.

Mr. TAUZIN. This is obviously some film, right, being broadcast?

Mr. OSTROFF. That is correct. It is not live from New York.

Mr. TAUZIN. But it is a live broadcast from the station of this

film?

10

Mr. OSTROFF. That is correct. It is a live broadcast from the station in this room.

Mr. TAUZIN. This is a real-time, over-the-air broadcast of this

film?

Mr. OSTROFF. That is correct. If this was the Super Bowl and you

wanted to watch it in your home and you happened to be in this

location, a bow-tie antenna on the back of your TV set would get

you high definition Super Bowl coverage.

Mr. TAUZIN. The point of your demonstration is that such an antenna could not work effectively using the 8-VSB technology?

Mr. OSTROFF. We want to make the point that it may work in

some locations, but it is a question of ease-of-reception reliability.

And under those circumstances the consumer is the final judge and

jury on everything we do; and if the consumer is dissatisfied with

reception on the signal, he is not going to buy the TV receiver.

Mr. TAUZIN. All right. I think it is appropriate now if we take

your 5 minutes of testimony, Mr. Hyman.

Mr. HYMAN. Thank you.

Mr. TAUZIN. Then we will go to the second demonstration. Mr.

Hyman is recognized for 5 minutes.

Mr. HYMAN. Thank you, Mr. Chairman, members of the committee, fellow panel members. I am pleased to be here to address

an issue we consider very crucial to the future of free over-the-air

television. I am speaking on behalf of the several hundred TV stations which supported Sinclair’s petition for notice of a proposed

rulemaking for a second DTV transmission system. The petition, I

might add, was summarily dismissed by the FCC.

We are here to request this committee use its resources to urge

the FCC to adopt a second digital television standard, giving broadcasters the free market choice on how to best serve their markets.

The current U.S. standard is called ATSC, and we request the

adoption of a second standard called DVB. It is our view the ATSC

standard fails in its most fundamental requirement, to replicate

the ease of reception that exists with today’s analog television.

To paraphrase the cover title of the magazine on display in front

of you, we have stepped back 50 years. Broadcasters serve the

American public for free and, therefore, have a strong interest in

making certain we can do just that in the simplest, most efficient

way possible.

Digital TV has all the promise of a newborn child. However, during its development, no one ever conducted any meaningful, realworld perception test using indoor antennas in areas where most

Americans live, the urban and suburban environments. It is now

freely admitted by most, knowledgeable, independent observers

that ATSC doesn’t work today as most people think it should. I

won’t bore you with the history of how we got here other than to

tell you, it was sobering for us to learn that millions of Americans

who now easily receive free television using simple antennas will

not be able to do so in the digital world due to the ATSC’s transmission system.

This system, called 8-VSB, is extremely fragile in the presence

of a naturally occurring phenomenon in the world of radio waves

called ‘‘multipath.’’ Multipath occurs when you do not have direct

line of sight between the TV transmitter and your antenna, and

11

the signal is degraded as it is reflected off a wide variety of objects

including buildings, foliage, automobiles, and people.

On analog TV, multipath is seen as ghosted images or snow.

While annoying, TV is still watchable. However, in digital you either receive a picture or you do not. In our industry, we call the

no picture the ‘‘blue screen of death.’’

Indeed, former FCC Chairman Newton Minow’s admonition that

‘‘television is a vast wasteland’’ has new meaning today. A cell

phone company used to run a commercial that said the phone is

no good unless the call goes through. This is how we feel; our

broadcast must get through.

The number of ATSC countries has dropped from five to three as

Argentina and Taiwan announced their decisions to rescind adoption of the ATSC standard, citing the failure of 8-VSB. In contrast,

32 countries worldwide, representing 2 billion people, have adopted

a standard using the transmission system we favor, COFDM. Sideby-side comparisons have demonstrated the superiority of COFDM

over 8-VSB, a fact validated by the marketplace. Thus far, European countries with a total population of 68 million have over

800,000 DTV receivers in consumers’ homes in less time that it

took this country, 273 million, to acquire less than 34,000.

Given this stark contrast, it is not surprising that independent

observers expect the global adoption of COFDM to continue. Soon

the U.S. will be an island of 8-VSB in a sea of COFDM.

American isolation on this technology issue is damaging not only

because we have adopted a flawed standard, but also because of

the tremendous economic and trade implications. Americans will

not have DTV equipment that is interoperable with the worldwide

standard, and the U.S. will not be able to capitalize on the tremendous scales of economy offered by a global standard. This means

Americans may possibly pay the highest prices in the world for digital television.

We believe the U.S. should be making dust, not eating dust.

When we first raised this issue, our critics denied there was a

problem. Then they admitted there was a problem, but they had

solved it. Then they admitted they had not solved it but they soon

would. Now they tell us the solution may be a few years away, but

we should stay the course and rely on the subscribing to satellite

or cable or installing an expensive, cumbersome outdoor antenna

such as the one on display in the back of the room.

The chart before you is CEA’s answer to the people of Washington DC. Have an electronics store locate your house on the map.

Find the antenna that matches the color of the area in which you

live, bring it home and install it. You will notice that most Washingtonians live in a red zone, requiring that they install a largesize outdoor antenna, just as we display today.

Another important issue bears mentioning. The FCC’s table of allotments, which assigns corresponding digital channels to existing

analog channels, managed to exclude the Nation’s 9,700 TV translators. Translators provide over-the-air television coverage in terrain-challenged markets, as well as deliver signals to cable head

end, the origin for cable carriage of all local stations.

The survey summary before you shows that nearly one out of

three American homes is located in an area that is served by one

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or more translators. While the ATSC standard provides no relief

for this dilemma, the DVB standard does because it permits the

use of on-channel repeaters, thereby ensuring the availability of

free and local TV service throughout the Nation.

In closing, at the risk of sounding melodramatic, we believe the

future of free TV rests on what happens with the DTV standard.

Maintaining the status quo will assign to broadcasters a digital

death sentence unable to easily reach millions of viewers. Such an

outcome could end free TV, leaving television in the hands of the

cable and satellite gatekeepers that are not free and are controlled

by too few.

Thank you very much.

[The prepared statement of Mark Hyman follows:]

PREPARED STATEMENT OF MARK HYMAN, VICE PRESIDENT FOR CORPORATE

RELATIONS, SINCLAIR BROADCAST GROUP, INC.

INTRODUCTION

We at Sinclair Broadcast Group, Inc. (‘‘Sinclair’’) sit before this Subcommittee

today because we want to realize the full promise of digital service in our communities. To this end, we are committed to rolling out our digital television service to

loyal viewers in our markets as quickly as possible. Unfortunately, at the moment,

this promise remains unfulfilled. We and other broadcasters have found that the

current DTV technologies and standards in the U.S. have simply not been conceived

or designed well enough for us to provide those services to the majority of consumers. Despite the critical importance of ease of reception, the current DTV system

was designed around the flawed concept that TV households would uniformly deploy

outdoor rooftop antennas and thereby enjoy a line-of-sight connection to DTV transmitters. The American public seems aware of these reception problems, since only

a tiny fraction of consumers are buying DTV receivers right now. And we at Sinclair

don’t blame them. It doesn’t make any sense to buy a receiver today that doesn’t

work and that will surely be obsolete tomorrow.

Right now, it just doesn’t look like the FCC or the industry is headed towards

a solution to this digital dilemma. The equipment manufacturers blame Hollywood

for not producing enough digital programming, Hollywood blames copyright problems and the cable industry, and the FCC does not know who to blame and is left

with the status quo. Meanwhile, the law requires Sinclair to spend hundreds of millions of dollars to set up its digital stations, and the broadcast industry as a whole

to spend billions of dollars in this effort. And, at the end of the day, because of these

technology problems, Sinclair can’t even be sure that it will have a viable business

or an independent means of delivering its digital signal that is not forced to rely

on the cable and satellite gatekeepers.

As a result, Sinclair respectfully requests that this Subcommittee urge a crucial

change in the FCC’s DTV policy, one that will address the ongoing technical problems and enable broadcasters to provide ease of reception and reliable over-the-air

DTV service to American consumers. Specifically, the FCC should give broadcasters

flexibility with respect to their choice of a DTV transmission standard, a key technical piece of the DTV system. The FCC should allow broadcasters to operate using

either the current U.S. transmission standard, which we and others believe does not

meet our requirements for ease of reception in our core coverage areas, or a second

transmission standard, DVB-T, that has been implemented with great success in

other countries. This policy change is fundamental to the future of digital television

in the United States.

WHO IS SINCLAIR?

Sinclair is a publicly traded company with thousands of shareholders and a multibillion dollar market capitalization. We are among the nation’s largest group television owners, owning, applying for, or programming more than sixty commercial

television stations. Given the magnitude of our broadcast interests, we have a huge

stake in the development of DTV. As a matter of fact, we have already invested millions of dollars to upgrade our facilities and expect to spend a total of $300 million

during the DTV conversion. We are extremely interested in the key policy issues affecting the transition to digital television, and we have been extremely active before

this Subcommittee and the FCC on these matters. In particular, we were the first

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1See Petition for Reconsideration, Sinclair Broadcast Group, Inc., MM Docket No. 87-268

(June 13, 1997); Memorandum Opinion and Order on Reconsideration of the Sixth Report and

Order, Advanced Television Systems and Their Impact on the Existing Television Broadcast

Services, 13 FCC Rcd 7418, paras. 58-85 (1998). 2See ‘‘Comparative Reception Testing of 8-VSB and COFDM in Baltimore,’’ Nat Ostroff, Vice

President New Technology, Sinclair Broadcast Group, and Mark Aitken, Advanced Technology

Group, Sinclair Broadcast Group (September 24, 1999).

broadcaster in late 1996 to recognize that the FCC’s original DTV Table of Allotments assigned UHF stations too little DTV power for them to provide adequate

service to their core business areas. We were at the forefront of an effort that led

the FCC to raise the DTV power ceiling for these UHF licensees, enabling them to

be competitive in the digital environment.1

THE DTV TRANSITION IS STALLED

There is a dire need for the technical change that we seek today. By any measure,

the DTV conversion has to this point been a failure. The Consumer Electronic Association (‘‘CEA’’) indicates that fewer than 50,000 DTV receivers capable of receiving

DTV service have been sold in the United States (most of those probably to distributors, retailers, and broadcasters), a paltry one-twentieth of one percent of U.S. TV

households. At this rate, it will likely be fifteen to twenty years (a decade or more

after the 2006 DTV transition deadline) before U.S. broadcasters will be able to turn

in their analog spectrum and the federal government will be able to auction off

those channels.

While some biased observers point elsewhere, this ongoing failure results from a

key flaw in the current transmission standard for DTV in the United States, the

Advanced Television Systems Committtee (‘‘ATSC’’) standard, which relies on 8-Vestigial Sideband (‘‘8-VSB’’) technology for modulation of the digital signal. The FCC

adopted this standard in 1996 without conducting any field trials of its own. Deficiencies in the ATSC 8-VSB standard for digital modulation prevent DTV broadcasters today from providing consumer-expected ease of reception and reliable overthe-air service to millions of television households lacking a clear line-of-sight between their TV antennas and broadcasters’ DTV transmitters. For the most part,

these are the millions of households that use the small, simple, inexpensive set-top

antennas so common today, rather than a large rooftop antenna.

Without a direct line-of-sight, a DTV signal traveling to a TV receiver can be degraded as it is reflected off a wide variety of structures and objects; such obstacles

can be natural or man-made, stationary or moving, and include walls and furniture

within a house, the exterior of adjacent houses and buildings, lighting and electricity poles, hills, mountains and other nearby terrain, moving people or animals,

automobiles, aircraft, rain or other precipitation, moving leaves, and any windblown object. These obstacles are clearly common, and have the potential to affect

TV reception in most urban and suburban areas. While analog multipath reflections

typically lead only to picture ‘‘snow’’ and ‘‘ghosting,’’ for 8-VSB DTV such reflections

can often mean a complete loss of reception.

During the summer of 1999, we conducted field trials in Baltimore, open to inprocess peer review, which demonstrated severe problems with ATSC 8-VSB performance under real-world, multipath conditions. Within our Grade A contour, there

was successful reception of our ATSC 8-VSB signal through small, simple antennas

little more than one-third of the time, but our DVB-T signal was received 100% of

the time. Even where the ATSC 8-VSB signal was successfully received, antennas

for the most part could be moved only slightly before losing reception.2 Clearly, this

lack of robustness makes ‘‘channel surfing’’ a thing of the past in the ATSC 8-VSB

world.

Since then, there has been an ongoing technical debate on the issue of ATSC 8-

VSB reception, with a number of consumer electronics manufacturers arguing that

improvements in ATSC 8-VSB reception have been and will continue to be made.

Recently, however, this debate effectively came to a close. The ATSC itself, the expert organization that recommended and is now charged with governing the DTV

standard, has now confirmed that the existing ATSC 8-VSB standard does not and

will in all likelihood never support ease of reception or reliable over-the-air service

to viewers using small, simple antennas in broadcasters’ core business areas.

First, on June 28, 2000, Robert Graves, the Chairman of ATSC, conceded that the

ATSC isn’t satisfied with the performance of ATSC 8-VSB technology, and he announced that ATSC would begin formal work towards developing a modified VSB

14

3 ‘‘ATSC Initiates Standards Activity to Explore VSB Enhancements,’’ Advanced Television

Systems Committee (June 28, 2000). 4Performance Assessment of the ATSC Transmission System, Equipment and Future Directions, Report of the VSB Performance Ad Hoc Group to the ATSC Task Force on RF System

Performance, Draft 1.0, at 19 (July 10, 2000). 5See Petition for Expedited Rulemaking, Sinclair Broadcast Group, Inc., MM Docket No.

——— (October 8, 1999).

standard.3 Then, in a July 10, 2000 draft of a report on ATSC 8-VSB, the ‘‘Ad Hoc

Group to the ATSC Task Force on RF System Performance’’ (‘‘Ad Hoc Group’’)—a

special committee formed by the ATSC—indicated that current ATSC 8-VSB receivers are ‘‘unable to assure robust reception’’ under the complex multipath conditions

that are common to urban and suburban environments.4 With respect to the future

development of the ATSC 8-VSB standard, the Ad Hoc Group found that any real

improvements in ATSC 8-VSB performance under multipath conditions ‘‘are expected to be of an incremental rather than a revolutionary nature’’ and ‘‘will require

new invention and new technological innovation, and the schedule for these new devices to the consumer marketplace cannot be reliably predicted at this time.’’ Ad Hoc

Committee Draft Report at 20. Finally, the Ad Hoc Group concluded that if and

when any solutions to these multipath problems are discovered, ‘‘the cost of implementing those solutions may be a significant impediment to market acceptance.’’ Id.

This Subcommittee should bear in mind that these ATSC 8-VSB reception problems are largely the result of a fundamental flaw in the concept of the current DTV

system. In designing its technology, ATSC designed a system around a test method

developed by ACATS, the advisory committee that helped develop the U.S. DTV system in the mid-1990’s. Receiver manufacturers adopted a concept for over-the-air

consumer DTV service that was also based on ACATS’ test methods. For DTV signal

strength measurements, ACATS wanted line-of-sight DTV reception, and it used 30-

foot rooftop or tower-mounted antennas for its tests. While this may have been appropriate for that testing, such reception conditions are clearly not the right model

for reception of free over-the-air broadcast service by today’s consumers, millions of

whom use small, simple antennas. Not surprisingly, the current DTV system does

not perform well under actual, real-world multipath conditions.

THREE ALTERNATIVE APPROACHES FOR THE FCC

With the permanent deficiency of the current ATSC 8-VSB standard now confirmed, the FCC can choose any of three strategies in its efforts to revive the DTV

transition. First, the FCC can give broadcasters flexibility with respect to DTV

transmission technology; here, each broadcaster could be granted the option of using

either the existing ATSC 8-VSB standard or a second DTV transmission standard

that has been adopted outside the U.S., with proven, high-quality performance

under multipath conditions. This is the DVB-T standard, developed and finalized in

1997 by the Digital Video Broadcasting Project (‘‘DVB’’), a global organization consisting of broadcasters, manufacturers, network operators, and regulatory bodies.

(Incidentally, the transmission system selected by a broadcaster would be invisible

to its viewers, just as in the case of the DTV scanning standard.) Multi-standard

receivers are available today, and adding DVB-T should not be a limiting factor.

Second, in an effort to improve multipath performance, the FCC can initiate a process to modify the existing ATSC 8-VSB standard in a fully or partially ‘‘backwardscompatible’’ fashion. Finally, the FCC can do nothing and hope against hope that

the promises of a small number of consumer electronics and chipset manufacturers

regarding alleged improvements in ATSC 8-VSB receiver technology—claims now

contradicted by the ATSC itself—will prove to be true.

THE ONLY VIABLE STRATEGY—ADOPTION OF AN OPTIONAL DTV TRANSMISSION

STANDARD

We believe that the only viable approach to solving the current DTV reception

problem is to give broadcasters the flexibility to choose between two transmission

options, the ATSC 8-VSB and DVB-T standards. With such flexibility, broadcasters

will be able to select the option that best suits their business plans and enables

them to maximize service to their local communities. We proposed this approach in

a Petition to the FCC in October 1999, 5 and, in the wake of that filing (which was

dismissed by the FCC without public notice), companies representing half of all licensed broadcast stations indicated to us that they also favor this strategy.

We do not inherently favor one DTV transmission standard or another. We do not

have a direct financial stake in any of these technologies. Nothing would please us

more than to have a workable ATSC 8-VSB system, now! However, a decision to

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6 Roy Stewart, Chief of the Mass Media Bureau, recently stated that ‘‘[I]t is well established

that there is insufficient broadcast spectrum to accommodate thousands of LPTV stations with

full interference protection without substantially impacting the transition to digital television,

particularly in the rural areas.’’ See ‘‘FCC Questions Low Power TV Broadband Bill,’’ Newsbytes

(June 15, 2000). 7See, e.g., ‘‘Application of On-channel Boosters to Fill Gaps in DTV Broadcast Coverage,’’ R.W.

‘‘Sam’’ Zborowski, ADC Telecommunications.

give broadcasters the flexibility to use the COFDM-based DVB-T standard would at

the very least provide the American public with a safety net, and would likely provide a certain, low-risk solution to the current 8-VSB reception problems.

Why do we believe that a DVB-T system would provide the American public with

the benefits of DTV to which it is entitled? The basis for our position lies in the

design of COFDM technology. Unlike the ATSC 8-VSB standard, COFDM technology was designed specifically to overcome the known effects of multipath conditions. The DVB-T standard thereby permits and has been demonstrated to provide

ease of reception and reliable over-the-air DTV service to viewers using small, simple

antennas in broadcasters’ core business areas. And, as shown in Sinclair’s own field

trials and in tests in Brazil, it can provide such high-quality reception while providing HDTV at data rates above 19.4 Mbps (the maximum data rate for ATSC 8-

VSB) over U.S.-sized 6 MHz channels.

Largely for this reason, the DVB-T standard has been adopted around the world,

and has been implemented in several countries with much greater commercial success than currently enjoyed by ATSC 8-VSB in the United States. To date, DVBT has been selected as the DTV modulation standard in the majority of European

nations, including Austria, Belgium, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg,

the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden,

Switzerland, the Ukraine, and the United Kingdom (‘‘U.K.’’). DVB-T has also been

chosen in Australia, India, New Zealand, Singapore and Turkey. (In Japan, broadcasters will utilize an alternative COFDM-based DTV standard.) In particular, the

U.K.’s DTV service, called ‘‘OnDigital,’’ began service in November 1998 within a

few days of the DTV launch in the U.S., and almost eight hundred thousand TV

households in the U.K. are now enjoying reliable, robust DTV reception. In addition,

Brazil recently conducted an exhaustive, head-to-head laboratory and field trial

comparison between ATSC 8-VSB, DVB-T, and other COFDM-based technologies,

using 6 MHz channels, and the Brazilian government has decided to exclude the

ATSC 8-VSB standard from further consideration. Argentina also announced recently that it will formally rescind its 1998 adoption of the ATSC standard. Overall,

in the near term, COFDM will be adopted by countries with an aggregate market

potential of almost two billion people. This in itself provides economies of scale.

Adoption of DVB-T as an optional standard would also permit the use of ‘‘on-channel DTV retransmitters,’’ potentially a critical tool in preventing the loss of overthe-air TV service in many rural and remote areas. Today, gaps in broadcasters’ signal coverage in these areas, often caused by rugged terrain, are filled in through

the use of TV translator facilities. During the DTV transition, however, there will

be tremendous congestion in the broadcast TV spectrum, and a substantial proportion of analog translators will likely have to be shut down.6 If broadcasters have

the option of using the DVB-T standard, they will be able to use repeaters to receive

signals from their full-power DTV stations and retransmit that programming to

these areas on the same channel. In comparison, it would be almost pointless to operate these on-channel retransmitters if the FCC maintains its exclusive reliance on

the ATSC 8-VSB standard, because the retransmitted signals would in most instances lead to effects similar to multipath conditions in these rural areas and could

not be received by consumers there.7

Finally, if broadcasters and consumers alike are given a free market choice between the two DTV transmission standards, new competitive forces will be unleashed, greatly benefiting the public interest. With both standards available, manufacturers of ATSC 8-VSB and DVB-T chipsets and transmitters will have a strong

incentive to optimize the performance of their chosen system. In fact, even though

DVB-T is not yet permitted in the U.S., we have already seen the benefits of such

competition—it was only after Sinclair and others brought the issue of poor ATSC

8-VSB performance to the fore and requested a DVB-T option that manufacturers

of ATSC 8-VSB receivers and chipsets began to make some incremental (albeit insufficient) improvements to their DTV receivers. In addition, a flexible transmission

standard would actually be consistent with the FCC’s overall approach to DTV technology, as well as its approach to regulating almost all other communications services, where licensees have access to a variety of transmission technologies.

16

8 As indicated above, the Ad Hoc Group found that the cost of such receiver-based solutions

‘‘may be a significant impediment to market acceptance.’’ Ad Hoc Group Draft Report at 20.

ARGUMENTS AGAINST ADOPTION OF THE DVB-T OPTION SHOULD BE REJECTED

Those who argue that the FCC should maintain exclusive reliance on ATSC 8-

VSB have repeatedly made the same basic arguments against the optional use of

DVB-T. These parties claim that (i) such a decision would increase potential for interference and require substantial modification of the DTV Table of Allotments, (ii)

such a decision would lead to a multi-year delay of the DTV roll-out, (iii) this decision would require that an additional modulation standard be incorporated into

DTV receivers, thereby increasing manufacturers’ costs and raising the price of

these receivers, and (iv) such a decision would be unfair to those consumers who

have already purchased an ATSC 8-VSB receiver. While these arguments may be

appealing to some, they are meritless. No one has advanced a legitimate reason

against broadcasters having the option to operate using the DVB-T standard.

First, a flexible transmission policy won’t require any modifications to the DTV

Table of Allotments. As a basic matter, we believe that the FCC should require

DVB-T broadcasters to limit their power levels to the extent necessary to avoid

causing greater interference than what would result from 8-VSB stations’ operations

at maximum permitted power levels. This rule would ensure that the DTV Table

could remain unchanged. While this policy might reduce DVB-T stations’ signal coverage, this is no reason to prohibit DVB-T operations. Such coverage would in all

likelihood still be sufficient, far exceeding the DTV power levels and coverage originally assigned to UHF stations by the FCC in 1996. In any case, no broadcaster

will be required to operate using the DVB-T standard, and each broadcaster could

simply factor any reduction in coverage into its analysis when deciding which transmission standard to utilize.

On the second issue, it is the FCC’s exclusive reliance on ATSC 8-VSB that is the

real threat of delay for the DTV conversion. The DTV transition is already down

to a snail’s pace, and, given the deficiencies of ATSC 8-VSB reception, most rational

consumers should not even consider purchasing an ATSC 8-VSB receiver at this

time. As a result, sticking with the status quo would likely lead to a decade-plus

delay in the digital transition. In contrast, a decision to give broadcasters the flexibility to operate using either the ATSC 8-VSB or the proven DVB-T standard would

bring certainty to the DTV roll-out. It should not take any longer to implement

DVB-T than to determine whether there is a fix for 8-VSB—Sinclair believes that

the resolution of any outstanding technical issues for DVB-T operations could likely

be conducted in less than a year, and that DVB-T set-top boxes could become rapidly available thereafter.

In addition, we believe that the cost of incorporating an additional reception mode

into DTV receivers would be marginal, and that the adoption of a flexible DTV

transmission policy would therefore have little effect on the price of DTV receivers.

DTV receivers sold today in the U.S. market are already configured to receive signals with multiple digital modulation modes—these receivers are typically designed

to receive signals from DBS systems, cable systems, NTSC, and 8-VSB broadcasters.

Moreover, there are already more than eight hundred thousand DVB-T receivers in

service today in the U.K. and Europe, and, given the global economies of scale resulting from such widespread DVB-T operations, it is likely that the necessary

equipment and expertise are available to incorporate this technology into DTV receivers in the U.S. at minimal expense. In any case, as the Ad Hoc Group acknowledges, whatever effect such a policy would have on the price of DTV receivers, this

effect would likely be dwarfed by the price increases associated with any adaptive

equalizer or other receiver-based solution to the ATSC 8-VSB reception problem.8

Finally, concern over consumers’ prior investment in ATSC 8-VSB technology is

also no reason to maintain exclusive reliance on the ATSC 8-VSB standard. Fundamentally, under a flexible transmission policy, ATSC 8-VSB service will be able

to continue. In any case, not many ATSC 8-VSB receivers are even in the hands

of consumers. Currently, there is no reliable data on exactly how many receivers

have been bought by consumers; surely, many of the receivers that have been sold

are in the distribution chain, and even that number is miniscule. Instead, this Subcommittee and the FCC should be more concerned about the fate of the existing

‘‘legacy’’ analog television sets, which today total approximately 240 million nationwide. As time goes on, many households will want to receive digital programming

through their current analog sets, and, with DVB-T service available, consumers

who own analog TV sets and simple antennas will be able to receive DTV programming by using a digital-to-analog converter box. If the FCC relies on ATSC 8-VSB

17

9See ‘‘NxtWave Communications’ Breakthrough Chip Makes Mobile and Indoor Reception of

Broadcast Digital Television Possible,’’ Business Wire (August 24, 1999); ‘‘New Digital Receiver

from Motorola Enhances 8-VSB Reception, Solves Multipath Problems,’’ Business Wire (August

23, 1999).

alone, such analog sets will be unable to receive that digital programming over-theair unless a large outdoor antenna is also deployed.

THE 8-VSB ALTERNATIVES—THE ROAD TO MORE DELAY

We believe that the two other approaches to resolving the ATSC 8-VSB reception

problems are fundamentally flawed. First, any effort to create a new, fully or partially ‘‘backwards-compatible’’ version of 8-VSB that provides better performance

under multipath conditions would likely require a lengthy technical debate, followed

by an even longer standards-setting process. Sinclair believes that such a complex

technical process would take a minimum of three to five years to complete. It is unreasonable to ask American consumers to wait that long for the promised benefits

of free, over-the-air DTV, when digital television services are thriving in other countries around the world. In contrast to this strategy, the implementation of an optional DVB-T standard would be largely an administrative task, with the most complicated aspect, the determination of interference criteria, likely taking little more

than six months.

The second of these 8-VSB strategies—simply waiting for consumer electronics

manufacturers to improve their ATSC 8-VSB receivers—is simply untenable. (Unfortunately, while untenable, this is the FCC’s approach at the moment.) It is true that

many equipment and chipset manufacturers maintain that nothing is wrong with

the ATSC 8-VSB standard and urge the Commission to leave this standard unchanged. As an initial matter, this support for the ATSC 8-VSB standard is not at

all surprising, given the trail of money winding through these corporations. One of

these companies has a direct, longstanding intellectual property interest in this

standard, another’s business is focused exclusively on the design, manufacture, and

sale of ATSC 8-VSB chipsets, a third has a significant investment in that 8-VSB

chipset manufacturer, and a fourth company has a formal partnership with DirecTV

and therefore benefits if terrestrial DTV fails and satellite subscribership grows.

In an effort to promote the existing standard, several of these companies last summer and fall made sweeping claims regarding a resolution of the ATSC 8-VSB reception problems.9 These promises have gone unfulfilled, however, and after almost

four years of failure, there isn’t any basis for entrusting these parties with the future of the conversion to digital television by the U.S. broadcast industry. (While

these companies point to the large number of DTV receiver models and variations

they have produced to date, none of these receivers have been shown to provide adequate off-air reception.)

The ATSC itself has now confirmed that the ATSC 8-VSB standard will likely

never support robust DTV reception under multipath conditions. As a result, if the

FCC chooses to continue its exclusive reliance on the ATSC 8-VSB standard, broadcast viewers will be forced either to obtain a line-of-sight to DTV stations’ transmitters through a large rooftop antenna (a rotor antenna if competing stations’ transmitters are at different locations) or to give up free over-the-air service altogether

by subscribing to pay TV service from a cable or satellite gatekeeper. We believe

that such inaction by the FCC will ultimately mean the end of free over-the-air TV

and all of the economic, social, political, and public safety benefits that come with

that service.

Accordingly, we urge this Subcommittee to implore the FCC to take action that

will enable broadcasters to provide a ubiquitous and interference-free DTV service,

unrestricted by the need to go through the ever-strengthening cable and satellite

gatekeepers. Only in this way can the FCC preserve the viability of free over-theair TV service.

CONCLUSION

With the ATSC’s confirmation that the existing ATSC 8-VSB standard cannot and

will not be able to support ease of reception and reliable over-the-air service to millions of American consumers, it is time for the FCC to give broadcasters the flexibility to operate using either the ATSC 8-VSB standard or the globally proven DVBT standard. If the FCC continues its current policy of inaction, this Subcommittee

should strongly urge the FCC to move forward to enable the American public to realize the full promise of digital television in the twenty-first century.

Mr. TAUZIN. Thank you, Mr. Hyman.

18

Our second panelist with a demonstration will be Mr. Gary Shapiro, President and CEO of Consumer Electronics Association. Mr.

Shapiro.

STATEMENT OF GARY SHAPIRO

Mr. SHAPIRO. Thank you very much, Mr. Chairman. I am going

to turn this over, if you will.

Mr. Chairman, members of the subcommittee, as a trade association, we represent the consumer technology industry; and we have

600 members including more than 20 manufacturers of digital television. I am pleased to introduce a collaborative demonstration of

the extraordinary viewing experience that is high definition television, or HDTV, which is not something you just heard about.

We have recreated two DTV environments. The demonstration

features both a living room environment, where the vast majority

of Americans watch TV, and a PC environment to highlight two

points. First, American broadcasters show that the DTV transmission standard actually does work. As Richard Lewis of Zenith

Electronics will demonstrate, it is capable of delivering DTV services, including HDTV programming and ancillary data services reliably over very many different delivery paths, including over-the-air

reception to antennas, indoor antennas.

Second, the American DTV standard is very flexible. As Matt

Miller of NxtWave Communications will demonstrate, it is equally

adept as a computer-based application, thus fulfilling DTV’s promise to bring about convergence between television and computing.

The equipment we have arranged here represents a cross-section

of what is now commercially available today in the United States

in almost 1,000 retail outlets across the country. Without further

ado, let me introduce Richard Lewis, with Zenith Electronics, who

will conduct the living room portion of the examination.

Mr. TAUZIN. Mr. Lewis. Mr. Miller will go first?

Mr. Lewis. I am sorry.

Mr. LEWIS. Thank you. Members of the subcommittee, before

starting this demonstration, I would like to introduce the equipment that you will be seeing today and also the setup that we have

here. In the far corner here, we have a fully integrated HD television. It is a Zenith, by rare coincidence. It is a top-of-the-line,

commercially available DTV product for the early adopter seeking

the best possible viewing experiences. It is capable of high resolution television.

In the—sort of directly across from me we have an RCA 38-inch,

fully integrated, direct view HDTV. This product is being introduced to the market this week with retail price of $4,000, half of

what this manufacturer’s lowest-price HDTV cost only a year ago.

And then slightly to the left of that is the set-top box, the aforementioned DTC 100, which is a device selling for around $600. It

provides consumers with one of the most affordable means by

which to receive DTV, including HDTV. We are using the set-top

box to the feed both the HDTVs, so you can see the pictures and

the sound from them, and we are feeding them with the silver sensor antenna, which is in the window behind you, just sitting there.

Our experience is much different than others, we placed it in the

window. It worked. And we are able to get multiple channels.

19

So, first, I would like to show you Channel 50, which is just an

NTSC channel, to allow you to kind of benchmark what that reception is like.

Mr. TAUZIN. Let’s again, to make sure we understand, this is a

real-time broadcast?

Mr. LEWIS. Everything you see will be received from a television

station transmitting in the Washington area.

Mr. TAUZIN. It will be received on an antenna that you have on

the window here?

Mr. LEWIS. Same antenna as this.

Mr. TAUZIN. It is behind the curtain. I am afraid to pull the curtain. Curtain number 1, number 2. It is behind there and it looks

just like that, I understand.

Mr. LEWIS. So what you will see is the rather marginal NTSC

transmission or environment. It is a very harsh environment. Lots

of multipath, lots of interference.

If we could then go to Channel 27. Without moving the antenna,

we moved from Channel 50 analog to Channel 27 digital. We are

now experiencing the HD television experience.

[Video played.]

Mr. TAUZIN. This is probably real time. This is real-life experience.

Mr. LEWIS. As we all like to channel surf, I would like now to

move to a different channel, once again, without adjusting the antenna. We are now on Channel 35, WHD.

Mr. TAUZIN. This was without moving this antenna. The antenna

is stationary.

Mr. LEWIS. Just stuck in a window.

And moving once again to another channel without moving the

antenna, the simulcast, or this is more of a standard definition of

conversion. And so, as you can see, our experiences——

Mr. TAUZIN. So we understand the demonstration, we moved

through some of the same channels that we saw earlier in the previous demonstration; and your testimony and demonstration is that

you are doing this with one antenna that is not being moved

around looks exactly like that?

Mr. LEWIS. That is right.

Mr. TAUZIN. And they were all 8-VSB technologies?

Mr. LEWIS. Those were all 8-VSB signals. In fact, we had been

in the room previously; we were receiving five different stations

with very robust signals and a very diverse set of receivers—the

Zenith receiver, the Harris receiver, the Thompson receiver, the

Phillips receiver, all the receivers—the NxtWave, sorry; I got there

eventually—all received all the channels without any problems.

So I think this is a good testimony to the progress and to the

ease of reception that has been referred to previously.

I would now like to move to Matt Miller to allow you to see a

computer-based application.

Mr. MATT MILLER. Good morning, Mr. Chairman and members

of the committee. What we are showing on the PC is again a realtime reception of the same collection of channels and essentially

the same receiving environment. It is a silver sensor. It is behind

curtain number 1. It does take a degree in engineering to change

the channels because it is software. However, my degree is in physVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
20

ics so I can’t help you there. So we have tuned to a signal channel,

but we can in fact tune all the channels.

The purpose of this demonstration, however, is to show some of

the progress that is been made on convergence, cost reduction and

flexibility. What is being used inside there is this video card. This

is a device which is going to be produced by multiple manufacturers. It will be introduced to consumers later this fall. Our chip is

this little jobber here; everything else is provided by someone else.

We have done the reference design. This card will retail for less than $300. It will be available this

fall and essentially has on it all the components for reliable reception and decoding of digital television, plugs into a garden-variety

PC and converts the PC into basically a high definition television

set for less than $300.

Equally importantly, what we are demonstrating here is live, reliable, real-time indoor reception into one of these antennas. A

very, very low-cost consumer entry to the pleasures and interaction

capabilities of digital television, and equally importantly, fulfilling

the objectives of digital convergence on a PC.

What you have now is this PC is connected up to a 19.4 megabit

per second wireless broadband link to the broadcaster. Television

is one of the applications, but we have envisioned numerous other

data applications as well, and this card will then enable that PC

to get connected to whatever data the broadcaster chooses to transmit.

So, in conclusion, we believe that the technology is very solid.

You have seen a variety of demonstrations here from high-end to

low-end to consumer plug-in devices, digital data. And with those

comments, I would like to conclude my demonstration.

Mr. TAUZIN. Thank you.

Mr. Shapiro, does that conclude the demonstration?

Mr. SHAPIRO. Yes. I have a statement I would like to make.

Mr. TAUZIN. Then the gentleman is recognized for 5 minutes.

Mr. SHAPIRO. Thank you, Mr. Chairman and distinguished members of the subcommittee. I do very much appreciate the opportunity to report to you where we are with the national mission that

actually Congressman Markey laid out many years ago.

It is a national mission to shift to digital television for many reasons; and I am pleased to report to you that the transition is actually doing very well. Despite limited broadcast programming and

confusion asserted by some who advocate delay, consumers are

buying DTV products in record numbers. Indeed, we just announced that in the first 6 months of this year our industry has

sold more DTV products than in all of 1999. In 1999, we sold over

121,000 DTV products.

Ten percent of all consumer dollars spent on TV is now believed

to be spent on digital TV. And more than two dozen manufacturers

have introduced more than 200 different DTV products, which are

being sold at some 1,000 retail stores around the country. Receiver

prices have plummeted and the performance and features offered

by DTV receivers continue to improve greatly. There is no doubt

that after 10 years of research and development, our industry, the

consumer electronics industry, has upheld its end of the bargain.

We have made a wide selection of digital television products availVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
21

able at retail at all sorts of affordable prices. But best of all, consumers love digital television. When they experience it, they want

it.

But if there is one key to a successful DTV transition it is a

steady supply of high-quality programming. The good news is that

the amount of nonbroadcast TV content is increasing every day.

Virtually every media provider has good news to report, and some

of this is detailed in my written statement. I will refer you to it,

but satellite and cable each have major success stories. The motion

picture industry has gone almost completely over to digital production for a variety of reasons, most of which are cost saving, not involving film prints; and even, indeed, prerecorded media has played

a surprising but critical role in the success of DTV. With more than

7 million units sold in just a few years, Americans have embraced

the high quality of DVD, digital versatile disc.

Many of these DVD consumers are buying digital television to

get the best possible picture and sound quality. This validates arguments that Americans want the best in home theater. They want

the better pictures and sound that digital television can offer.

With DTV drivers, DVD will soon be followed by prerecorded digital recorders like TiVo and replay, prerecorded HDTV on video

cassettes, Internet HDTV and, of course, high resolution video

games. Indeed, cable, satellite, prerecorded media and the Internet

will all be providing higher quality content.

With respect to over-the-air broadcast content, though, we are

sorry to report that the picture is not as pretty. Despite leadership

from CBS, PBS and several broadcast pioneers, such as North

Carolina’s WRIL, Washington’s WETA and others, the broadcast

industry is lagging behind in this transition.

This is unfortunate and surprising considering the history of

promises of broadcasters that they would use their loaned spectrum

to provide abundant high-quality content to American consumers.

These promises of abundant programming have not come to pass.

Most of the programming now seen on the digital channels includes

one of the programs you just saw is simply of converted analog

with a quality level far less than HDTV. And with some notable

exceptions the amount of HD programming is negligible and even

less appears to be in development for next season. It—indeed it

looks like we may be going the way of Europe, which does not have

HDTV in their plans and they are not providing it. It is just simply, basically a little bit better than analog.

More troubling are recent reports that some broadcasters are not

interested in providing HDTV or digital television at all. Some are

considering new standards in business models based on providing

subscription data services rather than free over-the-air television.

I would submit to you that Sinclair is not planning for digital television or HDTV. They are planning for subscription data and other

services, and they have not even begun the implementation phase.

Most disturbing are reports that a handful of broadcasters want

to lease out the public spectrum loaned to them by Congress for

mobile data services. We are seriously concerned by these developments. We find it unfair and inconceivable that a small group of

broadcasters who receive their spectrum for free would presume to

sell this spectrum capacity for commercial mobile uses and thus

22

enter into direct competition with those who paid billions of dollars

for their spectrum at auction.

Sinclair asked to be able to use the European COFDM standard,

which they say is more suitable for indoor reception and mobile

data applications. However, the fact is manufacturers are not receiving complaints from any consumers about indoor reception.

It is also to put this question of indoor reception in perspective.

Fewer than 5 percent of consumers currently receive their primary

signal via an indoor antenna. The rest is an outdoor antenna,

cable, satellite, et cetera.

The bottom line is that renewed broadcast wrangling over business plans and standards has serious consequences for American

consumers in the entire DTV transition. If some broadcasters offer

a new nonbackwards compatible system, many DTV products in

consumers’ homes today will be orphaned by the government and

unable to work with the new transmission system.

Consumers who invest in DTV products expect them to work for

a long time. It is difficult to convince consumers to buy digital television products with built-in tuners if they learn that broadcasters

are seeking to switch their transmission system in midstream.

Realistically, the addition of a new standard will take 2 to 4

years. Sinclair’s claim that we should simply add the European

standard defies credulity. That standard is not even being used for

high definition television, and it uses 8 megahertz of spectrum, a

much wider spectrum rather than 6 megahertz. Even if broadcasters somehow agree to add COFDM in the next several months,

we don’t know which standard it will be and how broadcasters can

adjust to fit it in the table of allotments without radically reducing

the energy and, therefore, the coverage. Any further delay will halt

DTV’s momentum, penalizing those broadcasters who have invested in digital equipment, depriving American consumers of a

wide array of broadcast digital services and postponing the timetable for the return to analog spectrum.

Mr. Chairman, members of the subcommittee, we do commend

you for your commitment to ensuring a smooth, rapid and consumer friendly transition. Under your oversight, the U.S. has assumed the position that this subcommittee first aspired to in its

first hearings, that as being the world leader in digital television.

And indeed we are. DTV sets are in the stores, consumers have embraced the product, many manufacturers are going 24 hours, 7

days a week, producing them; and a wide variety of providers are

recognizing the potential of DTV programming. Having come this

far, it is clearly not in the public interest to bring this forward

progress to a grinding halt and engage in yet another standards debate.

Thank you, Mr. Chairman and members of the subcommittee. I

would be pleased to answer any questions.

[The prepared statement of Gary Shapiro follows:]

PREPARED STATEMENT OF GARY SHAPIRO, PRESIDENT AND CEO, CONSUMER

ELECTRONICS ASSOCIATION

Thank you Mr. Chairman and distinguished Members of the Subcommittee. I appreciate this opportunity to report to you on the status of our national mission to

shift to digital television.

23

I am Gary Shapiro, president and CEO of the Consumer Electronics Association,

the association that represents the consumer technology industry. Our 600 members

represent $81 billion dollars in annual sales, and our products are found in more

than 99 percent of American homes. CEA members invented digital television, and

have spent more than a decade and a billion dollars bringing it from the research

labs to the retail shelves.

I will report on where we are today, the challenges we face, and the steps that

are necessary to complete the transition to DTV.

MANUFACTURERS HAVE DELIVERED ON DTV

I am pleased to report to you that the transition to digital television is going well.

Despite limited broadcast programming and the efforts of some who advocate delay,

consumers are buying DTV products in record numbers.

Indeed, in the first six months of this year our industry has sold more DTV products than in all of 1999. More than two dozen manufacturers have introduced more

than 200 different DTV products, which are being sold at more than 300 different

retail locations around the country. Availability increases every day as prices come

down, more models are introduced and new retailers begin stocking DTV.

In just over a year, some receiver prices have plummeted by half, and a variety of set-top boxes in the $600 range have been introduced, including boxes that incorporate reception for satellite and over-the-air DTV signals as well as analog signals.

At the same time, the performance and features offered by DTV receivers continue

to improve. This price competition is characteristic of our industry, and is rapidly

making this extraordinary technology more affordable to Americans at all economic

levels.

There is no doubt that, after ten years of research and development, the consumer

electronics industry has upheld its end of the bargain by making a wide selection

of digital television products available at retail.

CONSUMER INTEREST AND SATISFACTION ARE HIGH

Best of all, as my co-panelist Tom Campbell and other retailers will tell you, consumer satisfaction with DTV is very high. When consumers see the extraordinary

sound and video experience offered by DTV, they want it—and today’s analog television never looks the same again.

Indeed, a recent survey by the National Consumers’ League indicated that DTV

owners are overwhelmingly satisfied with the performance of their DTV products,

although they are dissatisfied with the amount of available broadcast programming.

Consumers are buying DTV even in those markets where broadcast programming

is limited or unavailable. Americans are finding that digital and high-definition displays enhance the analog TV experience, and provide the best available display for

DVD and other pre-recorded content.

CONTENT IS KING

If there is one key to a successful DTV transition, it is a steady supply of high

quality program content. This is the first law of our industry: product sales will only

take off when sufficient content is available to consumers. No matter how remarkable HDTV or any technology may be, consumers will only buy it if there is something to watch.

One obstacle to greater content availability is the need for the development of

adequate and reasonable standards for DTV copy protection CEA is committed to

working with other parties to ensure that copyrighted content, when transmitted in

digital formats, is adequately protected against copying in a manner that preserves

the fair use rights of American viewers.

The good news is that the amount of non-broadcast DTV content is increasing

every day, and virtually every media provider has good news to report. Direct-tohome satellite providers Echostar and DirecTV are each providing two full time

channels of HDTV programming to consumers nationwide. Congress’ recent passage

of the Satellite Home Viewer Act will soon accelerate the number of viewers receiving HDTV via satellite.

In addition, major cable operators such as Time Warner and Cablevision are providing their subscribers in select markets with HDTV programming. This summer

cable subscribers in New York can enjoy Yankees and Mets baseball in HDTV.

And recent technical agreements between the consumer electronics and cable industries help enable seamless interoperability between DTV and cable systems, and

will make it even easier for cable companies to provide HDTV to viewers.

Prerecorded media also is an important part of the DTV equation. DVD sales have

exploded, with more than seven million units sold. Americans have embraced the

24

high quality of DVD, which validates our view that viewers want and will pay for

better pictures and sound. Now many consumers are using their digital television

to take their DVD experience to the next level—the wide-screen, high-resolution

playback DVDs provide. Similarly, many consumers are exploiting the high-resolution performance of digital recorders such as those produced by TIVO and Replay.

Finally, the future will bring broadband Internet to the American living room and

with it yet another conduit for digital television. We encourage members of this

committee to move forward on legislation that will bring us closer to ubiquitous

broadband in the home.

We are pleased with this explosion in non-broadcast DTV programming. While the

broadcasters have an important role to play in bringing DTV to all Americans, the

fact is that 70 percent of U.S. households receive their primary video signal through

cable, and an additional 12 percent through direct to home satellite. We expect

these trends to continue and increase in the digital world.

LOANED SPECTRUM SHOULD BE USED PRIMARILY FOR FREE, OVER-THE-AIR

BROADCASTING

With respect to over the air broadcast content, we are sorry to report that picture

is not as pretty. Despite leadership from CBS, PBS, and several local broadcast pioneers such as Capitol Broadcasting’s WRAL, the broadcast industry is lagging behind in the DTV transition.

This is unfortunate and surprising, considering the history of this issue and the

numerous public representations that have been made by the broadcasters.

Let’s look at the history of DTV. In 1987, this Subcommittee held its first hearings on ‘‘advanced’’ television. The main concern was that the United States was

falling behind in the global HDTV technology race and that Americans might become second-class citizens in the digital television future.

At the same time broadcasters came to Congress and asked for a loan of billions

of dollars in public spectrum so that they could transition to the digital age. The

bargain was that this spectrum would be used primarily to provide free over-theair digital television to the American people.

Congress largely agreed that the broadcasters needed some amount of loaned

spectrum, but many believed that they should receive only the bandwidth required

to transmit one standard definition channel.

The broadcast industry responded that they required the full 6 megahertz (MHz)

of spectrum, because 6 MHz was needed to bring American consumers the holy grail

of digital technology: high definition television, or HDTV.

For example, in 1995 testimony, NBC Chairman Robert Wright promised Congress that:

‘‘We intend to lead the industry in the introduction of digital television, and,

in particular, motion picture quality, high definition television. All broadcasters

are committed to doing so. We realize we must provide truly high definition television service in order to remain competitive.’’

Similarly, the National Association of Broadcasters assured the FCC that ‘‘HDTV

programming will be a significant or even dominant element of the business strategy of most broadcasters.’’

ABC, CBS and NBC even supported the imposition of HDTV programming requirements. Indeed, in January of 1996 when the DTV spectrum loan agreement appeared to be in jeopardy, the heads of the three networks sent a letter to President

Clinton in which they stated:

‘‘At a time when we as a country are legitimately concerned about creating

information haves and have nots, it makes no sense to deprive the public of the

opportunity to receive for free the high-quality picture and sound that would

otherwise only be available on a subscription basis . . . As it has since television

was invented, the public should have the opportunity to receive such high quality transmissions as part of our country’s free, over-the-air service.’’

Based on these representations—but not without misgivings—Congress agreed to

loan every broadcaster 6 MHz of spectrum, free of charge, in order to ensure the

survival of free, over the air television in the digital age.

Congress was assured that, after a rapid transition, broadcasters would return

their analog spectrum for public auction. Based on the broadcasters’ commitments

to Congress and American consumers, the consumer electronics and other industries

moved forward to make DTV and HDTV a reality.

Unfortunately, broadcaster promises of abundant HDTV programming have not

come to pass. Most of the programming now seen on the digital channels is

upconverted analog, with a quality level far less than HDTV. With some notable exVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00028 Fmt 6633 Sfmt 6621 E:\HEARINGS\65906 pfrm04 PsN: 65906
25

ceptions, the amount of HDTV programming is negligible, and even less appears to

be in development for next year.

More troubling are recent reports that a number of broadcasters are not interested in providing HDTV or digital television at all. Some state that they are considering new business models primarily based on providing subscription data services,

rather than free over the air television.

Others claim that, after ten years of development and with DTV sets already in

American homes, they would like to revisit and change the DTV transmission standard.

Most disturbing, there are reports that a handful of broadcasters want to lease

out the public spectrum loaned to them by Congress for wireless data applications,

We are seriously concerned by these developments.

Having received their public spectrum, we believe that broadcasters must keep

their end of the bargain. Decisions by a minority of broadcasters to move away from

free over-the-air television are an abrogation of the agreement with Congress and

a denial of public trust.

We especially find it unfair and inconceivable that a small group of broadcasters

who received their spectrum for free would presume to sell this spectrum’s capacity

for commercial mobile uses—and thus enter into direct competition with those who

paid billions for their spectrum at auction.

These broadcasters give a variety of reasons for their newfound reluctance to

move forward. One group led by Sinclair Broadcasting submitted a petition to the

FCC—which the Commission correctly rejected—asking that they be allowed to use

the European COFDM standard, which they say is more suitable for indoor reception and mobile data applications.

We do believe that the existing, FCC-approved American transmission standard

is the best choice for the U.S. broadcast environment. The American standard was

chosen by broadcasters after a decade of competitive analysis and testing because

it allows them to replicate the current coverage radius of analog TV service to fixed

receivers; reduces interference with existing analog or other digital signals, has a

data capacity sufficient for HDTV, and allows for efficient power use. The standard

has been reaffirmed by recent tests, such as those conducted by CBS and the FCC,

as well as the ‘‘real world’’ usage by consumers.

Throughout the DTV process, manufacturers have been making every effort to

recognize and meet broadcaster concerns. However, the fact is that manufacturers

are not receiving complaints from consumers about indoor reception.

On the contrary, purchasers of early generation DTV products justifiably expect

a high degree of performance, and all indications are that they are getting it. In

the National Consumers’ League survey, four out of five DTV owners report that

they are satisfied with their signal reception.

At the same time, investment in 8-VSB DTV receiver technology is unprecedented

and ongoing. New chipsets and continued innovation by manufacturers are providing marked improvements in 8-VSB performance in high-multipath and other difficult reception environments. Just as with all other consumer electronics products,

future generations of DTV receivers will provide improved features and performance.

It is also important to put the indoor reception issue into perspective. Fewer than

five percent of consumers currently receive their primary programming via an indoor antenna.

Indeed, reception of today’s DTV signal using indoor antennas is often superior

to today’s analog reception, since there is no snow or ghosting with digital signals.

Similarly, CEA is not opposed to spectrum flexibility, or to broadcasters providing

ancillary data services. To the extent that consumers are interested in purchasing

devices that access such services, our industry looks forward to supplying them. Indeed, the DTV standard is extensible and can fully accommodate future uses and

services in a way that will be fully backward compatible with existing equipment.

To the extent that some broadcasters may have recently changed their business

plan to put more emphasis on mobile or subscription applications, we ask that they

work with manufacturers to utilize the full capabilities of the U.S. standard to provide those services.

At the same time, we believe that ancillary services should remain ancillary. Congress’ intent was to allow broadcasters to make use of capacity bits not needed for

high definition to provide supplementary services. This should not be confused with

what appear to be plans by some broadcasters to make data delivery the primary

focus of their services, to the detriment of broadcasting video or HDTV programming.

26

The bottom line is that this renewed broadcaster wrangling over business plans

and standards has serious consequences for American consumers and the entire

DTV transition.

In fact, broadcasters’ lingering debates already are impacting the ability of consumer electronics manufacturers to deliver DTV to American viewers.

Based on broadcasters commitments to the DTV standard, manufacturers have invested billions of dollars in developing compliant receivers and displays. Now, if

some broadcasters opt for a new non-backwards compatible system, many DTV

products in consumers’ homes will be orphaned and unable to work with the new

transmission system.

Looking ahead, it is hard for manufacturers to plan and build products—especially ‘‘integrated’’ televisions with built-in tuners—when some broadcasters are still

wavering at this late date over the system they want to use to transmit programming.

We have heard that the possibility of a change in the standard is already causing

some broadcasters to postpone purchasing DTV equipment. Broadcasters know that

if the system changes, existing transmission equipment would need to be modified

or could become obsolete.

As unfortunate as these consequences may be, the worst aspect of a change in

broadcast systems would be the undermining the public’s confidence in the DTV

transition. Consumers who invest in DTV products justifiably expect them to work

for a long time. It will become difficult to convince consumers to purchase digital

television products with built-in tuners if they learn that broadcasters are seeking

to switch their transmission system in mid-stream.

DELAY IS THE GREATEST THREAT TO THE DTV TRANSITION

Congress should be concerned about the harmful consequences that would result

from the delay caused by the consideration of a non-compatible standard such as

COFDM.

Even the proponents of alternative standards acknowledge that any change to the

DTV standard would require extensive study and debate of the numerous engineering issues regarding channel allotments, system information and receiver design.

Realistically, the development of consensus around a specific alternative DTV system, its standardization, the FCC rulemaking, and the necessary amendments to

the FCC’s table of allotments would take two to four years. Even this appears conservative, considering that the process that brought us today’s standard took more

than a decade to complete.

Any further delay will halt DTV’s momentum, penalizing those broadcasters who

have invested in digital equipment and programming, depriving American consumers of a wide array of broadcast digital services and significantly postponing the

Congressional timetable for the return of the analog spectrum.

By contrast, delay would reward a handful of undeserving winners: The small minority of broadcasters who, having asked for and received public spectrum, now

have no plans for digital television broadcasting, no digital programming, or no investment in deployment.

CONCLUSION

Mr. Chairman and members of this Subcommittee, CEA commends you for your

decade long commitment to ensuring a smooth, rapid, and consumer-friendly transition to DTV.

Under your oversight, the U.S. has assumed the position that this Subcommittee

aspired to at that first advanced television hearing in 1987 on world leadership in

digital television.

DTV sets are in the stores, and consumers have embraced the product. A wide

variety of providers are recognizing its potential and producing DTV programming.

And CEA remains committed to working with broadcasters, cable providers and all

other interested parties to ensure the fastest, most consumer-friendly transition to

DTV.

Having come this far, it is clearly not in the public interest to halt our forward

progress to engage in yet another standards debate.

Thank you Mr. Chairman. I would be happy to answer any questions you or the

Members of the Subcommittee may have.

Mr. TAUZIN. Thank Mr. Shapiro.

Next will be Mr. Dale Hatfield, Chief of the Office of Engineering

and Technology of the FCC, accompanied by Deborah Lathen, the

Chief of Cable Services Bureau. Welcome to you both.

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Mr. Hatfield.

STATEMENT OF DALE N. HATFIELD

Mr. HATFIELD. Mr. Chairman, Mr. Markey, and members of the

subcommittee, thank you for the opportunity to appear before you

today. Before I begin, I want to clarify, that the opinions that I am

expressing here are my own and may not necessarily reflect the

views of the Commission itself. I would like to commend you for

holding this important and timely hearing. As you know, the Commission is currently conducting the first of its own 2-year periodic

review of the DTV system.

The Commission has established an aggressive schedule for television stations to construct their digital facilities. To date, the Commission has granted DTV construction permits to 515 stations.

There are now 139 stations in the United States transmitting digital programming. In the top 10 markets, 36 of the 40 network-affiliated stations are on the air. In markets 11 through 30, 59 of the

79 network-affiliated stations are on the air.

Given the scope and complexity of the required effort, I believe

that broadcasters have done a good job of starting the DTV transition process. However, I am concerned that the pace of the transition is now being threatened. I believe that broadcasters must

make the transition from analog to digital transmission as quickly

as possible for three basic reasons. First, all segments, and I know

of no exceptions—all segments of the communications industry—

cable, DBS, telephony and so forth—have begun or have made the

conversion to digital. If broadcasters do not make the transition

promptly, they risk falling behind their competitors.

Second, the overall technical advantages of converting from analog to digital are overwhelming in terms of the number and richness of the services that can be delivered.

Third, the public interest demands that spectrum be used more

efficiently. Let me elaborate briefly on the third point.

As head of the Office of Engineering and Technology, I see firsthand the problem of increasing demand for the precious radio spectrum. As an engineer, I know that with modern digital techniques

you can do much more with a 6-megahertz channel than send a

single channel of analog television. Therefore, a successful digital

transition will free up valuable spectrum for other uses.

As you know, the current uncertainty over the choice of a transmission standard threatens that transition. In February, the Commission denied the Sinclair Broadcast Group’s request that we

modify our rules to allow COFDM in addition to the current ATSC

8-VSB standard. Sinclair had raised questions regarding the adequacy of 8-VSB reception with simple indoor antennas under complex multipath conditions.

In denying Sinclair’s petition, the Commission noted that it believed that what Sinclair had highlighted was a shortcoming of

early DTV receivers, rather than, A, any basic flaw in the ATSC

standard or, B, an indication that replication of existing analog

service is unachievable with the 8-VSB standard.

The Commission also noted that receiver manufacturers and

their chip suppliers were aware of the problem and were aggressively taking steps to resolve the multipath problems that Sinclair

28

had raised. We are continuing to look at this issue in our periodic

review to ensure that adequate progress is being made by receiver

manufacturers and others, and we are undertaking our own field

tests to further assure ourselves of such progress.

I am concerned that one of the motivations for consideration of

a different standard appears to be a purported advantage of

COFDM in providing new portable and mobile services, rather than

any advance of COFDM in providing improved or enhanced television broadcast service.

I believe this raises fundamental issues regarding the intent of

Congress and the Commission’s rules in providing broadcasters

with a free second channel for DTV operations. And I want to emphasize that I did not oppose efforts to reconfirm that 8-VSB operates as designed to replicate NTSC, today’s standard coverage; indeed, I welcome efforts to develop information to improve that technology. However, these efforts should be limited to performance attributes that are relevant to broadcasting and are consistent with

the goals established by the Commission for DTV.

More specifically, any such efforts must be premised upon, one,

the requirement that no changes be made to the DTV table of allotments—this is essential, absolutely essential, to avoid years of unacceptable delay—and, two, must be premised upon adherence to

the Commission’s service replication and minimum interference

goals. These are necessary to ensure that the American public will

not be deprived of free over-the-air television service.

I should add that the FCC Chairman Kennard expressed similar

sentiments in a letter he sent to the NAB and to MSTV yesterday;

and with your permission, I would like to have that letter be part

of the record.

Mr. TAUZIN. Without objection, it is. And try to wrap up.

Mr. HATFIELD. Let me close by emphasizing that I personally remain very bullish on the long-term future of HDTV. I am convinced

that HDTV fundamentally changes the nature of the viewing experience and will be very successful in the marketplace. And, of

course, DTV, as you have heard and seen demonstrated today, can

do even more.

There are simply too many potential benefits to be had from the

introduction of digital television not to move forward as quickly as

possible. At the Commission, we stand ready to do our part in helping to ensure that outcome.

Thank you very much for the opportunity to appear today. I

would be pleased, of course, to answer any questions that you may

have.

[The prepared statement of Dale N. Hatfield follows:]

PREPARED STATEMENT OF DALE N. HATFIELD, CHIEF, OFFICE OF ENGINEERING AND

TECHNOLOGY, FEDERAL COMMUNICATIONS COMMISSION

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity

to appear before you today to discuss digital television (DTV). Before I begin, I do

want to clarify that any opinions I express today are my own, and may not necessarily reflect the views of the Commission.

I would like to commend you, Mr. Chairman and other members of the Subcommittee, for holding this hearing on this important topic. This hearing is indeed

very timely and consistent with the Commission’s own ongoing review of the

progress of the DTV conversion process.

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1 A complete summary of the specific DTV stations that are on-the-air is attached as an Appendix to this statement.

In the proceedings establishing the DTV transition, the Commission stated that

it would conduct a review every two years to ‘‘ensure that the introduction of digital

television’’ serves the public interest. The Commission has commenced its first periodic review of DTV with the adoption of a Notice of Proposed Rule Making in March

of this year. This Notice addresses a number of issues that we believe require resolution to ensure that progress with the DTV conversion continues and potential

sources of delay are eliminated.

DTV Build-Out Status

I would like to begin with a brief overview of where we are in the rollout of DTV.

As you know, the Commission has established an aggressive schedule for television

stations to construct their DTV facilities. All network-affiliated DTV stations (i.e.,

ABC, CBS, NBC and Fox stations) in the top ten television markets were to be constructed by May 1, 1999 and all network-affiliated DTV stations in the top 30 TV

markets were to be constructed by November 1, 1999. All remaining commercial

DTV stations are to be constructed by May 1, 2002, and all non-commercial DTV

stations are to be constructed by May 1, 2003.

Given the breadth and complexity of the efforts needed for the building of a DTV

station, these requirements are clearly ambitious. Yet, the broadcast industry has

done an admirable job of embarking upon this challenge.

The FCC has granted permits to 515 stations for the construction of DTV facilities. There are now 139 stations in the United States transmitting digital programming (108 licensed and 31 operating under Special Temporary Authority or experimental authority). In the top ten TV markets, 36 of the 40 network-affiliated stations are on the air (33 with full facilities). In markets 11-30, 59 of the 79 networkaffiliated stations are on-the-air.1

In fact, much of the delay in construction to date has been the result of matters

generally beyond broadcasters’ control—such as obtaining local zoning approval,

completing international coordination requirements, facing delays in obtaining

equipment, finding adequate transmitter sites and encountering difficulties in

scheduling construction personnel. Delays have also resulted from broadcaster petitions to change their DTV channel.

Nevertheless, despite these obstacles, broadcasters have done a good job of starting the DTV transition process. However, I am concerned that this good initial

progress is now being threatened at a critical time when more needs to be done and

the pace of the transition needs to accelerate.

Why the Digital Transition Needs to Take Place Quickly

Let me begin with why I believe it is in the best interests of broadcasters to make

this transition happen as quickly as possible. I am convinced that broadcasters must

make the transition from analog to digital transmission quickly for three basic reasons. First, all other segments of the telecommunications industry—commercial wireless

service providers, such as cellular and PCS; wired services, such as DSL and cable

television systems; direct broadcast satellites; mutichannel multipoint distribution

systems; and, others—have made, or are in the process of making, the conversion

to digital. I know of no significant exceptions.

Given that cable, satellite and other video competitors have already made the

transition to digital, broadcast television cannot afford to be left behind. I believe

that broadcasters, out of self-preservation and in order to serve the viewing public

for which they have received licenses, must quickly make this transition in order

to remain competitive.

These other services are either direct competitors with over-the-air broadcasting

or indirect competitors in the sense that they represent alternative means of delivering entertainment and other content to end users. Over-the-air broadcasting must

make the conversion from analog to digital transmission in order to remain competitive in the long run. And, as we all recognize, in Internet time the long run is not

necessarily all that long. In short, it is my belief that the broadcast industry must

make the conversion to digital for both ‘‘offensive’’ and ‘‘defensive’’ reasons.

Second, from a technological perspective, the overall advantages of converting

from analog to digital transmission are now overwhelming. The advantages of using

digital techniques for representing, storing, processing and transmitting signals are

clear. These include:

• the greater robustness of digital signals;

• the ability to detect and correct transmission errors when they do occur;

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• the ease with which digital signals can be encrypted; • the facility with which the signals can be manipulated or processed using modern

computer techniques and, especially, the associated ability to take advantage of

the greater computing power and falling costs associated with Moore’s Law;

and, • the ease with which different types of signals or services can be multiplexed or

provided on a common transmission facility.

Third, the broadcast industry must make the conversion from analog to digital because the public interest demands that spectrum be used more efficiently. I would

like to expound briefly on this point.

I head the Office of Engineering and Technology (OET) at the Commission. OET

has a number of responsibilities, one of the most fundamental being to handle spectrum allocation matters within the Commission. From that perspective, I see firsthand the problem of increasing demand for a scarce national resource, the radio

spectrum. This increasing demand, which is particularly intense in the range from

roughly 300 MHz to 3,000 MHz, is propelled by a number of developments. As members of this Subcommittee know, these developments include not only the rapid

growth in traditional, voice, commercial mobile radio services, but also intense interest in providing advanced data communications services, including Internet access,

to a host of portable end user devices.

A successful transition of television broadcasting from analog to digital will free

up spectrum for other uses as determined by the marketplace. We need that to happen sooner rather than later. As an engineer, I know that you can do much more

with a 6 MHz channel than today’s analog standard definition television. We must

act accordingly. We must find ways to speed the build-out of DTV or at least keep

it on track. The benefits to the American consumer of new and improved digital

broadcast services and the consequent freeing up of spectrum for other services are

just too great.

I would like to further emphasize my strongly held belief that, in making the

transition to DTV, we must not do anything that would jeopardize the continuation

of free, over-the-air television for the American public. Fortunately, technological developments—including better digital compression and modulation techniques—have

given us the luxury of having our cake and eating it too. With digital technology,

we can continue to have traditional broadcast services as well as exciting new

broadcaster-provided services—including High Definition Television, multiple

streams of Standard Definition Television, or some combination of these along with

other new services such as datacasting. And we can do all of this while freeing up

spectrum for other valuable uses, including increased local loop competition.

DTV Transmission Standard

It is my understanding that broadcasters are now undertaking a review of the

DTV transmission standard. This review includes looking at COFDM (Coded Orthogonal Frequency Division Multiplex) technology as a possible alternative to the

8-VSB (Vestigial Side Band) standard for its reputed benefits for new service applications, including mobile and data transmission operations.

In the DTV rulemaking process, the Commission agreed with the overwhelming

consensus of the broadcast industry that the new DTV channels should provide for

replication of existing analog television service so that broadcasters have the ability

to reach the audiences that they now serve with a free, over-the-air video service

and that viewers continue to have access to the stations that they can now receive.

Another objective of the DTV transition process has been to minimize interference

to both the existing analog and new digital television services. The Commission’s

Advisory Committee on Advanced Television Service, a group selected to represent

the interests of broadcasters and others in this matter, chose the 8-VSB system as

the modulation method that would best allow achievement of these goals. This

choice was made after a long and thorough process of laboratory and field testing

and subsequent evaluation that found 8-VSB superior to other modulation technologies, including COFDM.

I believe that a mid-course change to introduce a new modulation technology at

this late date could lead to lengthy and unacceptable delays in the DTV transition

process and could undermine the service replication and interference goals on which

the DTV transition is based. Notwithstanding the arguments and claims of the

COFDM proponents that allowing optional use of COFDM could be accomplished

quickly, any changes to the DTV transmission standard that would necessitate revisions to the DTV Table of Allotments could result in years of delay in the DTV transition process. Such a delay would, at best, be unfortunate for broadcasters and the

viewing public, and could lead to uncertainty that might jeopardize the ultimate

success of the transition.

31

As you know, in February the Commission denied the Sinclair Broadcasting

Group’s request that that we modify our rules to allow broadcasters to transmit

DTV signals using COFDM modulation in addition to the current Advanced Television System Committee (ATSC) 8-VSB modulation standard. Sinclair had raised

questions regarding the adequacy of 8-VSB reception with simple indoor antennas

in a station’s core business area under complex multipath conditions. The Commission noted that it believed that what Sinclair had highlighted was a shortcoming

of early DTV receiver implementation, rather than any basic flaw in the ATSC

standard or an indication that replication of existing analog service is unachievable

with the 8-VSB standard. The Commission also noted that receiver manufacturers

and their chip-suppliers were aware of the problem and were aggressively taking

steps to resolve the multipath handling problems that Sinclair had raised.

In taking the action, the Commission encouraged parties to provide additional information on the topic in the context of the agency’s formal periodic review of the

progress of the analog-to-digital conversion. We will use that mechanism to monitor

the progress being made by receiver manufacturers and others to improve indoor

DTV reception under the existing standard. Using the resources of our own Laboratory in Columbia, Maryland, we are undertaking our own field tests to further assure ourselves of such progress. We are also encouraged that the ATSC DTV Task

Force has recently committed to look at the issues related to transmission and reception of DTV and to make any appropriate recommendations. Hopefully, taken together, these government and industry actions will resolve any lingering concerns

regarding the choice of the modulation technique and will allow the conversion to

move forward with confidence.

I am also concerned that one of the primary motivations behind this review of the

DTV standard by some members of the broadcast industry appears to be a purported advantage of COFDM to provide portable and mobile services—rather than

any ability of COFDM to provide improved or enhanced television broadcast service.

I believe that this raises fundamental issues regarding the intent of Congress and

the Commission’s rules providing broadcasters with a free second channel for DTV

operations.

Consistent with the direction of Congress, the Commission gave each broadcaster

temporary use of an extra six megahertz of spectrum for the DTV transition and

it is intended that stations use this resource principally for television broadcasting.

Section 336(b)(2) of the Communications Act, 47 U.S.C. 336(b)(2), directed the Commission to permit flexible use of the digital licenses but to ‘‘limit the broadcasting

of ancillary or supplementary services . . . so as to avoid derogation of any advanced

television services, including high definition television broadcasts . . .’’ It is the mandate of Congress and the desire of the American people that the principal service

of broadcast television remain the provision of free video programming to television

viewers, and broadcasters need to plan for the digital transition in accordance with

this purpose. To the extent that some broadcasters may desire to enter the market

for the provision of mobile services, they can do so by acquiring licenses in the

newly reallocated spectrum at 700 MHz or some other spectrum that is allocated

for mobile services.

Any efforts by broadcasters to reallocate their spectrum to new mobile data services at the expense of free, over-the-air television raises serious questions as to

whether broadcasters would be operating in a manner consistent with the purpose

for which Congress made available to them a second digital license for free. As you

know, Congress amended Section 309(j) of the Communications Act in 1997 to require that new licenses be awarded by competitive bidding. One of the few exceptions to this auction requirement was the initial licensing of DTV stations to be used

by broadcasters to replicate their existing analog television service. If a principal

purpose of this spectrum now becomes mobile data services, it is unclear whether

this exception to competitive bidding should continue to be applied to such operations.

I do not oppose efforts to reconfirm that 8-VSB operates as designed to replicate

NTSC. Nor do I oppose efforts to improve the 8-VSB standard to permit reception

even where NTSC service is not available today. However, these efforts should be

focused on performance attributes that are relevant to digital television broadcasting and are consistent with the goals established by the Congress and the Commission for DTV. In particular, any efforts by the broadcast industry should ensure

that no changes would be required to the DTV Table of Allotments. In addition, they

should adhere to our service replication and minimum interference goals to ensure

that the American public will not be deprived of free, over-the-air television service.

32

DTV Provides Broadcasters with New Opportunities

I believe that DTV provides broadcasters with a tremendous opportunity to enhance and revitalize their core business of television broadcasting, as well as to offer

the public new and exciting ‘‘datacasting’’ services on an ancillary basis.

While I applaud broadcasters’ initial efforts to build DTV facilities, with few exceptions, broadcasters, in my opinion, have not provided the compelling programming content needed to stimulate consumer demand for DTV. Most digital programming available to date has been merely up-converted, existing analog programming.

Consumers have not yet been provided with the tremendous capabilities of DTV.

Nonetheless, I remain very bullish on the long-term future of HDTV. Since the

first demonstrations I saw many years ago, I have been convinced that HDTV fundamentally changes the nature of the viewing experience and that it will ultimately

be very successful in the marketplace.

And DTV can do even more.

The multiple programming capability of DTV can allow broadcasters to offer their

viewers more programming choices. With DTV, broadcasters can provide their viewers with ‘‘customized’’ camera angles so they can watch a sporting event from a particular point of view or follow a favorite player. The ancillary data capabilities of

DTV can also be used to provide program-related information to further enhance the

viewing experience.

I am also very optimistic about the future of datacasting and DTV. I base this

on the advantages of the traditional broadcast architecture coupled with the advantages produced by the conversion from analog to digital transmission. Broadcasts’

strength, from an architectural standpoint, lies in the ability of television stations,

both individually and collectively, to distribute popular content that large numbers

of people want to receive simultaneously (for example, the Super Bowl) or have

available simultaneously for viewing at will (for example, stock quotes). High power

broadcast stations providing coverage over thousands of square miles represent an

extremely efficient way of delivering such content. Said another way, it is a very

efficient architecture for one-to-many communications.

There are simply too many potential benefits to be had from the introduction of

DTV not to move forward as quickly as possible.

Conclusion

Given the extraordinary benefits that can be realized with DTV, government and

the involved industries need to recommit to ensure a successful and rapid DTV transition. In my opinion, the bigger that opportunity, the faster the transition should

occur.

Perhaps The Field of Dreams adage of ‘‘build it and they will come’’ is also appropriate for DTV with a slight modification—‘‘build it and show the wonderful capabilities of DTV and they will come.’’

Thank you very much for the opportunity to testify before you today. I would be

pleased to answer any questions you may have.

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35

36

37

38

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Mr. TAUZIN. Thank you, Mr. Hatfield.

We will next turn to Mr. Tom Campbell, the Corporate Director

of Ken Crane’s Home Entertainment Centers in Rancho Palos

Verdes in—pronounce that for me.

Mr. CAMPBELL. Rancho Palos Verdes.

Mr. TAUZIN. [continuing] California.

Mr. Campbell.

STATEMENT OF TOM CAMPBELL

Mr. CAMPBELL. Mr. Chairman, thank you so much. I want to say

thank you for holding this hearing and to the entire committee

here for examining this important issue, the transition to digital

television.

I would like to also thank you for inviting me here today. If I

may just add for a moment, I was very touched by seeing the students from Louisiana that are here. This is our future, the consumer. That is what I am here to really address.

Mr. TAUZIN. Better than that, they are the winners of a Free Enterprise Program.

Mr. CAMPBELL. And also to your son, Mr. Shimkus, who wanted

to watch Pokemon on HDTV. That is what we do. We recovered the

very first HDTV on August 6th, 1998. The consumers were enthralled, just blown away by the quality of the picture and the performance.

I would like to mention I have been involved in consumer electronics retailing for more than 25 years. Currently, I serve as Corporate Director for Ken Crane’s Home Entertainment Centers. We

are a 51-year-young company. Our founder is—I better not say his

age—but he still goes to the office every day, and he meets and

greets our customers many times.

And we first started carrying HDTV in August, 2 years ago. We

had three sets on the floor. And Mr. Crane talks to our customers.

He was amazed at how excited they were about it. So what we

started doing was to carry more and more HDTV. And as part of

my testimony here you will see the percentages that have skyrocketed up to now over 60 percent of our big screen sales are

HDTV.

And I want to mention that Sinclair mentioned, ‘‘The consumer,’’

I believe, said, ‘‘dictates what we do; we must keep the consumer

satisfied.’’ Well, in all honesty, I am the one that talks to the consumer. They come to our stores to purchase this product. I can tell

you, in my opinion, DTV and HDTV meet and exceed their expectations.

We have sold close to 3,000 sets so far in 2 years. That is 3,000

sets for eight stores in Los Angeles or Orange County. That is just

us alone. Those are phenomenal numbers. Set-top boxes, I believe

the first year was around 30 boxes. This year we are up to a total

of 400 and some set-top boxes. So we are seeing, even with the lack

of some programming, a real interest in over-the-air.

I have a HDTV in my home, and I have to surf the channels to

find out who is on the air. The latest is Mexico XETV Channel 6

that I receive in my home from Tijuana with a crystal-clear picture

with an indoor antenna. I would like to invite any of you who come

41

out to California, please come by my house. You can see it for yourself. It is very exciting.

Now, granted, some people do need an outdoor antenna, some us

an indoor antenna or rabbit ears. I will tell you right now, our customer is very, very excited about this product. During the past 2

years we have sold more than 2,000 digital television sets. It constitutes two-thirds of our big-screen sales.

Now the pricing is down to 1,000—I sound like a commercial here; I am sorry. We are down to $1,999 for an HDTV-ready set.

The set-top decoder that receives on-the-air signals, as well as direct TV, $649. So that means you can purchase a total HDTV solution today at Ken Crane’s for just over $2,600. That is a notable

decrease from prices a year ago of $7,000.

Overall, consumer interest in digital televisions led to a marked

increase in store traffic force. Those consumers who are buying

DTV products are highly satisfied. Less than 1 percent of the DTV

products we have sold have been returned. And one was because

his wife demanded a fur coat; if he got the HD, she got a fur coat.

He said no and brought it back. True story.

We are very excited about HDTV. It represents a huge quantum

leap in the quality of home entertainment for Americans. Trust me

when I say, when they see it, they love it. Mr. Bill Ott, who lives

in Palos Verdes, my neighbor, came into my house, saw my HDTV;

he said, ‘‘I want it right now,’’ went down to the store, purchased

one; and right now, with an indoor antenna, he is watching HDTV.

We have nine signals in Los Angeles, three in San Diego. I live

in a high area; I get San Diego as well. So I have a total of 11—

no—yeah, 11 channels; do my math here—that I can watch.

Now, for consumer electronic retailers, confidence is the key to

our success. If we sell our customers products that don’t meet their

satisfaction because of poor performance, or fall short of their expectations, we are not going to be in business very long. It is obvious from our sales success that consumer confidence in digital and

HDTV is very high.

Mr. Chairman, I am not a digital engineer. I can’t provide you

with the technical argument favoring current or any other standard. But I can speak with authority about consumer expectations.

Right now, from my personal experience, DTV products exceed consumer expectations.

But the DTV customers are not going to be happy if someone

suddenly changes the rules. They are going to be very upset if they

learn their new DTV set is not going to work anymore, that it

won’t work with all the local broadcast stations because some of

the stations are being changed to a broadcast system their set

won’t receive.

I support the current format for two reasons—three, actually. It

works, it already has solid performance and proving as manufacturers do make improvements in every generation of equipment, it

has been established—implemented, rather—in TV stations and

consumer homes across the country. We should not disenfranchise

consumers by changing rules on them midstream. I really urge us

to stay the course.

Thank you very much, Mr. Chairman. If there are any questions,

I will be happy to answer.

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[The prepared statement of Tom Campbell follows:]

PREPARED STATEMENT OF TOM CAMPBELL, CORPORATE DIRECTOR, KEN CRANE’S

HOME ENTERTAINMENT CENTERS

Chairman Tauzin, I’d like to thank you for holding this hearing to examine the

important issues regarding the transition to digital television. And, of course, I want

to thank you and the other members of the subcommittee for inviting me here

today.

Mr. Chairman, I have been involved in consumer electronics retailing for more

than twenty-five years. Currently, I serve as corporate director for Ken Crane’s

Home Entertainment Centers. Ken Crane’s is a fifty-one year-old company with

eight stores serving southern California, including Los Angeles and Orange County.

We are known nationally and internationally for introducing new, cutting-edge technologies to consumers. Our stores carry high end, mid and entry-level products and

range from custom design all the way to a warehouse clearance center.

I have been involved with digital television for many years. In 1998, as director

of and prior to the sale of Dow Stereo/Video of San Diego, California, I had the personal honor of introducing and selling to consumers the first high definition television monitor with a separate set-top box. Press worldwide covered this significant

event. The first set was sold to Kathy and Ed Davis. Mr. Davis, employed by the

U.S. Navy, bought the set on the spot after seeing HDTV for the first time. We also

sold the first integrated set in November of 1998. At each of the events launching

these products, we attracted more than 5,000 people. We soon sold out our entire

inventory of HDTV products even though there were no digital broadcasts in the

market at that time! I am proud and honored to say that we were recognized in

the congressional record for our leadership in successfully launching HDTV to the

public.

During the past two years, Ken Crane’s has sold more than 2,900 digital television sets. DTV products now constitute almost two-thirds of our current big screen

sales. Many consumers are buying HD display units to enjoy the phenomenal, highquality picture that comes when the display is combined with their DVD player.

Others are purchasing these displays to watch improved analog TV and in anticipation of receiving high definition signals via over-the-air broadcast, cable and satellite.

We sell DTV displays beginning at under $1,999 and a set top box decoder for

just $649 meaning a consumer can purchase a total HDTV solution today for slightly more than $2,600. This is a notable decrease from prices just a year ago of more

than $7,000. Overall, consumer interest in digital television has led to a marked increase in store traffic. And those consumers who are buying DTV products are highly satisfied with their purchase. Less than one percent of the DTV products we have

sold have been returned.

Our experience is not unique. Consumer electronics retailers across the United

States are reporting the same consumer excitement over DTV. In the Washington,

DC area for example, Myer-Emco reports that two out of every three of their large

screen television sales are DTV sets. We hear similar reports from chains like Now

Stereo and Video with locations throughout the Southern United States and Ultimate Electronics Stores in the Midwest.

Clearly, consumers are excited about digital television. And they should be. DTV

represents a huge leap in the quality of home entertainment for Americans. It is

a product that exceeds consumer expectations. Trust me when I say, ‘‘When they

see it, they love it’’ and want it now!

For consumer electronics retailers, consumer confidence is the key to our business.

If we sell our customers products that do not meet their satisfaction because of poor

performance or fall short of their expectations, we won’t be in business very long.

It is obvious from our sales success that consumer confidence in digital and HDTV

is high.

That is why I am concerned about the efforts of some who seek to change the existing DTV broadcast system. The current broadcast standard was adopted largely

so that consumers can be confident that the new DTV products they purchase will

always be capable of receiving the same local broadcast stations they enjoyed with

their analog set.

I’m not a digital engineer, Mr. Chairman, so I can’t provide you with a technical

argument favoring the current standard versus any other. But I can speak with authority about consumer expectations. Right now, from my personal experience, DTV

products exceed consumer expectations. But our DTV customers will not be happy

if someone suddenly changes the rules. They will understandably be upset if they

learn that their new DTV set is not going to work any more or that it won’t work

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with all of the broadcast stations in their local area because some stations have

changed to a broadcast system their set won’t receive.

In my opinion, this kind of scenario would definitely undercut consumer confidence, resulting in a major setback in consumer acceptance of digital television

and a potential major backlash from early adopters who already have purchased

DTV sets.

Mr. Chairman and members of the committee, as a retailer I support the existing,

approved American standard. Why? 1) It works; 2) Its already solid performance is

improving as manufacturers make improvements in every new generation of equipment; 3) It has been established and is implemented in TV stations and consumer

homes across the country; and 4) We should not disenfranchise consumers by changing the rules on them mid-stream.

In my experience dealing directly with consumers, digital television not only

meets, but exceeds consumer expectations. As prices continue to come down, more

and more consumers are making the transition from their old analog TV to a new

digital television set. And, of course, they are eagerly awaiting more programming

and HDTV from local stations, satellite and cable. I ask you today to help consumers and retailers continue the transition to DTV. Let’s not derail the transition

and deny consumers this wonderful new technology.

Thank you again for allowing me to appear before you today. I’ll be happy to answer any questions.

Mr. TAUZIN. Thank you very much.

Next we will have Mr. Richard Lewis, Senior Vice President, Research and Technology, for Zenith Electronics Corporation in Glenview, Illinois.

STATEMENT OF RICHARD M. LEWIS

Mr. LEWIS. Thank you, Mr. Chairman. Briefly, Zenith has an 80-

year history and experience building receivers for American consumers. We have participated in the DTV standard-setting process

since its inception in 1987. I would like to make just three brief

points. One, the transition is underway. We have strong sales and

we are out of stock on our integrated receiver on a regular basis.

We are expanding our product line. We are moving beyond HDTV

compatible sets into lower cost and direct view sets. These, from

Zenith’s perspective, are not the signs of a transition in trouble.

Second, any call for a change in the modulation system is unfounded and without merit. Arguments to the contrary failed to examine all aspects of the issue. Coverage, that being from a transmitter, how much of the area will receive a signal, interference

both into analog and digital transmission, and then, of course, reception issues. Lately much of the talk has been about reception,

but the other 2 issues are extremely important also, and part of the

reason that DSB was selected.

In fact, these criteria were the main focus of a multiyear scientifically rigorous and peer review process to obtain a system optimized for the American market. Other systems, such as COFDM

have been engineered for a different network architecture. In the

U.K., for instance, in London, there are fewer channels with national content versus many channels with local content. London, for

instance, would have 6, 8 megahertz physical channels versus 10

or 12 channels, physical channels in a New York or a Chicago.

So switching to COFDM would also be a choice between fewer

channels or millions of lost viewers according to recent studies by

Jules Cohen, showing the impact of COFDM on interference levels

and using the FCC modeling.

Also in the U.K., multiple main transition towers are used versus

a single main tower with broad coverage as we use in the United

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States. The recent NAB filing for the biannual review comments

points to the difficulty in adding towers and antenna structures

with local zoning issues.

It is these criteria that have made the U.S. broadcast industry

a success and make 8-VSB the superior and the only viable transmission service to provide the replication of services, that being

those who can get analog reception today to also get digital reception while still allowing each broadcaster an additional channel

during the transition.

Third, and moving to reception, receivers are working today as

evidenced by the recent CBS study showing that virtually 100 percent reception in the Philadelphia market where their test was conducted. Previous issues with multipath interference, especially,

have been related to rushed implementation and not any limitations in the standard. This should be important to note also that

COFDM does not work in every location and every situation just

as your cell phone does not work in every location. VSB can and

will have multipath interfere performance equal to COFDM and, in

some cases, better.

So in closing, I would like to point out that any change in the

transmission standard at this point would be disastrous for consumers, broadcasters and consumer electronics manufacturers. A

new standard will significantly delay the implementation and provision of DTV services to the public and jeopardize the return to

the analog spectrum by 2006 as mandated by Congress.

Mr. Chairman, thank you for the opportunity to speak. I would

be happy to take any questions. I also ask that the aforementioned

CBS Report is entered into the report.

[The prepared statement of Richard M. Lewis follows:]

PREPARED STATEMENT OF RICHARD M. LEWIS, SENIOR VICE PRESIDENT, RESEARCH

AND TECHNOLOGY, ZENITH ELECTRONICS CORPORATION

Mr. Chairman, my name is Richard M. Lewis, and I am Senior Vice President

for Research and Technology for Zenith Electronics Corporation, a long-time leader

in consumer electronics and digital high-definition television (HDTV). I appreciate

the opportunity to appear before you today to discuss the nation’s transition to digital television (DTV) technology, an issue in which Zenith has a long-standing and

continuing interest.

By way of background, Zenith was a founding member of the FCC Advisory Committee on Advanced Television Services in 1987 when we launched our research and

development program for high-definition television (HDTV). Zenith proposed one of

the original 23 HDTV systems in 1988, and created the first HDTV research consortium in 1989. In 1990, the FCC mandated that the HDTV standard would be based

on the ‘‘simulcast’’ approach proposed by Zenith, and one year later we at Zenith

completed our initial development work on the vestigial sideband (VSB) digital

transmission system. Zenith joined the Digital HDTV Grand Alliance in 1993, in

combination with other manufacturers to jointly develop a best-of-the-best digital

television system for America, and in 1994, the Grand Alliance chose Zenith’s VSB

technology as its broadcast and cable transmission system. In 1995, the Advisory

Committee recommended the Grand Alliance system to the FCC, and in 1996, the

Commission adopted the digital television broadcast standard based on the Grand

Alliance system, which includes Zenith’s VSB technology. Since then, our company

has worked aggressively to help launch HDTV. So, Mr. Chairman, Zenith has a long

involvement and expertise regarding the digital television issue.

There are four main points that I wish to make to you today:

1. Nearly four years after the 8-VSB system was approved, the DTV transition is

well underway. Consumers, broadcasters and manufacturers have already made

significant investments in 8-VSB. Digital TV sales to consumers are growing

and customer satisfaction levels are high.

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1These include stations in New York, Los Angeles, Boston, Philadelphia and Washington, D.C.

2 According to CEA, if broadcasters choose the ‘‘fast lane’’ to DTV and demonstrate 100 percent

compliance with the FCC’s rollout schedule while providing a high percentage of digitally-originated content to consumers, DTV product penetration could reach 50 percent by 2006. If broadcasters take a ‘‘middle of the road’’ approach and experience continued station conversion delays

while providing consumers with a high percentage of up-converted analog content, DTV product

penetration will be no more than 30 percent by 2006. Finally, if broadcasters choose the ‘‘off

ramp’’ on the road to DTV—characterized by non-HDTV business models and delays related to

reopening the DTV standard—DTV product penetration will only be 15 percent by 2006.

2. Calls for changing the 8-VSB system are absolutely unfounded. The 8-VSB system provides superior coverage of existing analog National Television Systems

Committee (NTSC) service areas, presents less interference potential, and utilizes the spectrum efficiently. The FCC made the right choice in selecting this

standard, Congress did the right thing in setting a schedule to transition to

DTV, and we should stay the course.

3. Early DTV receivers encountered some multipath interference and indoor reception difficulties. However, these problems were associated with some first-generation receivers, not with the standard, and I am happy to tell you today that

these limitations are being remedied.

4. Any change in the transmission standard at this point would be disastrous for

consumers, broadcasters, and consumer electronics manufacturers. A new

standard will significantly delay the implementation and provision of DTV services to the public, and jeopardize the return of the analog spectrum by 2006,

as mandated by Congress.

Please permit me to amplify on these points.

THE DIGITAL CONVERSION IS WELL UNDERWAY

The conversion to DTV is progressing and most broadcasters are working to convert to digital broadcasting, pursuant to the schedule set out by Congress and the

FCC. The National Association of Broadcasters reports that 147 television stations

are currently broadcasting digitally using the 8-VSB standard, covering almost twothirds of the nation’s television households.1 CBS is broadcasting 12 prime-time

hours a week in high definition, while ABC, Fox, NBC and PBS are all offering digital television programming. Cable and direct broadcast satellite program providers

such as HBO and Showtime also are initiating new digital programming, including

high definition.

Zenith is concerned, however, that the current lack of high-definition programming and other compelling applications will hinder the rapid rollout of digital television. An analysis by the Consumer Electronics Association (CEA) of the potential

growth of DTV receiver sales, assuming various levels of HDTV programming content, underscores the need for broadcasters to step up their programming efforts to

help spur receiver sales.2

The real success of the DTV transition rests with consumers, and here the news

is good. According to CEA, more than 200,000 digital television products have been

sold to date, and the number of DTV products sold in 2000 is expected to be more

than triple that sold in 1999. Retailers report that consumers are enthusiastic about

the improved video and audio quality that DTV delivers, and consumer satisfaction

is high among the early purchasers of digital receivers. A recent survey conducted

by the National Consumers League shows about three-fourths of DTV owners describe themselves as ‘‘very satisfied’’ with both the picture and the sound quality

of their new sets. DTV picture quality received a striking 96 percent overall consumer satisfaction rating. Consumer excitement is certain to build, as more DTV

programming becomes available.

These facts indicate that the DTV transition is well underway and the momentum

is growing.

THERE IS NO BASIS FOR REOPENING THE DTV STANDARD

Despite the progress that has been made to date, a few parties are pursuing an

agenda that would delay and disrupt the timely delivery of DTV to the public. These

entities are urging that the DTV standard be modified to permit the inclusion of

a COFDM-based modulation scheme. This request, proposed by broadcasters seeking to delay investments in digital and high-definition television, is based primarily

on one aspect of the 8-VSB system: its capability to provide adequate over-the-air

service using simple indoor antennas in a comparatively small number of urban

areas that are subject to strong multipath interference. It is true that some early

generation DTV receivers fell short of expectations with regard to reception in

strong multipath environments. However, this shortcoming was due to the state of

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3See OET Report at page 14. 4 KYW-DT DTV Field Test Report, Walter Sidas, P.E., CBS Engineering, March 28, 2000. 5 Id.

6 Id.

7 Id.

8 Jules Cohen has more than five decades of experience as a professional consulting engineer

in the field of broadcasting. Mr. Cohen has represented the Association for Maximum Service

Television (MSTV) in Advanced Television Systems Committee (ATSC) Subcommittees and

Technology Groups, served on ATSC’s Executive Committee and co-chaired a number of ATSC

Technology Groups. Mr. Cohen’s clients have included all five of the major television networks,

the National Association of Broadcasters, MSTV, the Electronics Industries Association, major

broadcast group owners and individual radio and television stations. The depth of Mr. Cohen’s

knowledge and expertise is further detailed in his professional background statement attached

as an appendix to this testimony. 9 Engineering Statement, Channel Allotment Considerations Comparing the Use of 8-VSB or

COFDM, Jules Cohen, P.E., June 9, 2000 at p. 2 (emphasis added).

technology in some early receivers that were rushed to the marketplace to jumpstart

the DTV transition, not to any intrinsic deficiency in the 8-VSB modulation system.

I am happy to report to you today that Zenith and other manufacturers have been

working diligently to resolve these difficulties, and they are well on their way to

being corrected.

It is important to remind ourselves that the 8-VSB transmission standard was

chosen over a decade through an open, scientifically rigorous and peer-reviewed

process. Extensive laboratory and field testing of various competing systems was

conducted before the 8-VSB system was selected, and the analysis included studies

of the relative merits of 8-VSB and COFDM. The FCC’s exhaustive record on digital

television fully documents both the industry’s and the FCC’s unanimous conclusions

to adopt the 8-VSB standard.

Why was the 8-VSB standard chosen? This standard was selected principally because of its ability to replicate the signal coverage of existing NTSC service areas,

because it minimizes interference with other signals, and because of its high datarate capacity.

Since the beginning of DTV, a top priority has been insuring that a DTV station’s

service area is generally equal to or better than its NTSC service area, thereby allowing digital broadcasting to reach the maximum number of viewers possible. This

is a critical factor for the success of the transition. The 8-VSB system was selected

in large part because of its superior signal coverage. Indeed, use of COFDM would

result in a significant loss of suburban and rural viewers who live on the fringe of

a station’s NTSC service area.

The conclusion that 8-VSB is superior for purposes of NTSC service replication

is well documented by studies conducted at literally thousands of field test sites.3

In a well-documented scientific study, CBS recently conducted extensive DTV reception tests at 128 outdoor and 42 indoor sites within the coverage area of KYW-DT

in Philadelphia, Pennsylvania, and concluded that ‘‘it is evident that the current

ATSC system is replicating the NTSC reception coverages for both indoor and outdoor reception.’’ 4 Using second and third generation 8-VSB receivers from Zenith,

Motorola and NxtWave, CBS found that these receivers could produce a perfect DTV

picture 94 percent of the time using indoor antennas when even a marginal NTSC

picture was available.5 With outdoor antennas, the receivers produced a high-quality

DTV picture 99 percent of the time when even a marginal analog picture was

viewable.6 Noting that the tests demonstrated ‘‘a continuous level of improvement’’

in VSB receiver technology, the CBS study concludes, ‘‘8-VSB remains a viable system for providing DTV service and replication of the broadcasters’ service area.’’ 7

A highly experienced and well qualified professional consulting engineer, Jules

Cohen, has recently conducted an analysis of real-world parameters comparing

ATSC/8-VSB and DVB/COFDM systems in a 6 MHz channel for New York City, a

heavily populated area in terms of TV viewers and TV transmitting facilities. This

report is attached to my testimony as an appendix.8

The study ‘‘shows a clear preference for the use of 8-VSB rather than COFDM

from an allotment viewpoint’’ and concludes that:

With identical effective radiated power and antenna height above average terrain, use of COFDM provides less coverage and results in more interference to

other stations than 8-VSB. If the COFDM effective radiated power is increased

to overcome the reduction of service from that provided by use of 8-VSB, interference is further aggravated, particularly to the analog stations continuing to

operate at their assigned power levels. Consequently, either fewer stations can

be accommodated using a specified number of channels, or service areas must

be reduced substantially.9

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10See DTV Report on COFDM and 8-VSB Performance, FCC/OET 99-2 (dated Sept. 30, 1999)

(the ‘‘OET Report’’). 11 Id. at Figures 2-7. 12OET Report at page 27.

Using the FCC’s own computer calculation technique, coverage calculations for

three New York City DTV stations (WNBC-DT, WABC-DT and WPIX-DT) show that

COFDM, operating at the same power level as 8-VSB, would result in an average

of 656,000 fewer viewers for each of the stations. This result is, of course, contrary

to the goal of bringing the benefits of DTV to all Americans, and fails one of the

principal objectives of the DTV transition plan.

The 8-VSB system allows broadcasters to replicate their entire NTSC coverage

area from a single transmitter site at three-and-a-half times less power than

COFDM requires. Increasing COFDM’s transmitting power to obtain coverage comparable to that provided by 8-VSB (in order to match existing NTSC service areas)

would result in increased interference to existing NTSC services and other DTV

services. It would also force broadcasters to incur significantly higher costs for more

powerful transmitters and additional electric power.10

An important advantage of the 8-VSB standard is its ability to minimize co-channel and adjacent channel interference to broadcasters’ analog and digital signals. By

contrast, a COFDM signal using the same power level as 8-VSB would not only provide less coverage but cause substantial interference with other NTSC and DTV stations. If COFDM power levels were increased to overcome the reduction of service

from that provided by use of 8-VSB, the interference problem would only be exacerbated. Therefore, allowing broadcasters to use COFDM transmission would require

the creation and adoption of a new DTV Table of Allotments, a formidable task considering the long and arduous process that the FCC went through to finalize the

current DTV Table of Allotments. It is highly unlikely that a digital channel assignment plan could be adopted that would accommodate all U.S. broadcasters.

As the Cohen study demonstrates, interference calculations for the same three

New York City DTV stations reveal that their use of COFDM would have a significant impact on existing analog and new DTV stations in the Northeast, resulting

in the loss of almost 10 million viewers. For example, 1.9 million fewer viewers

would be served by the three New York DTV stations using COFDM rather than

the FCC-mandated VSB standard. The number of viewers lost for other digital television stations due to COFDM interference would be about 7 million. Significantly,

the effect of interference caused by COFDM would adversely affect analog TV reception for 986,000 to 1.1 million New York viewers depending on transmission power

level.11

But 8-VSB has other advantages compared to COFDM, which is optimized for network architectures used in Europe. COFDM may make sense for a place like the

United Kingdom where only six channels providing nationwide video content (not

HDTV, by the way) are broadcast using multiple transmitters. By contrast, our television broadcast model in the United States is built around localized content transmitted by many stations (a dozen or so in major metropolitan markets) primarily

from single transmitters reaching a wide coverage area. The fact is COFDM makes

many trade-offs in terms of coverage area, interference and data rate to achieve its

transmission properties, while VSB is optimized for the United States and other

countries with similar broadcast models.

In addition to offering broadcasters a greater coverage area, superior interference

protection for existing NTSC and new DTV services, and lower costs, the 8-VSB system also provides greater immunity to impulse noise interference (which is essential

for VHF transmissions). The 8-VSB system also delivers a higher data-rate capacity

than COFDM, an advantage that is important not only for HDTV transmissions but

datacasting services as well. The FCC has stated that the 8-VSB system’s data rate

advantage over COFDM could impact the ability of broadcasters to provide HDTV

programming.12

Finally, while it is clear that 8-VSB meets the performance goals for which it was

designed and selected—service area replication, interference rejection, and maximum data rate—I would note that VSB technology has the flexibility for future enhancements. Recently, some in the broadcast industry have focused attention on the

potential portable and mobile applications of DTV technology. If broadcasters and

consumers desire such options in the future—options that were not contemplated

when the DTV standard was developed and adopted—VSB transmissions can be

augmented by employing a mixed data mode of two or more simultaneous transmissions of varying data rates and robustness. Any such extensions to the standard,

however, should be pursued in parallel with ongoing 8-VSB receiver improvements

so as not to hinder the transition to free over-the-air digital television. In fact, the

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13The OET Report concludes that multipath reception problems identified in early DTV receiver designs are solvable with improved adaptive equalizer performance and that a well-designed 8-VSB receiver should be able to provide satisfactory reception where strong multipath

conditions exist. OET Report at page 24. 14 Broadcasters need to do their part as well. Reception is affected adversely when broadcasters transmit signals at less than their full-authorized power, from antennas that are less

than their full-authorized height, or with incorrect technical parameters (which can cause ‘‘jitter’’ and other problems). 15Fourth Report and Order, 11 FCC Rcd at 17787-17791 (1996). 16 Nat Ostroff, Vice President, Sinclair Broadcasting Group and Chairman, ALTV Engineering

Committee, A White Paper: Facing the Final ‘‘Sign Off,’’ Why We Need a Digital Standard (formerly available at <http://www.transmitter.com/DTV/NatOstroff.html, visited October 8, 1999). 17OET Report at page 24.

Advanced Television Systems Committee is pursuing this parallel path approach in

establishing a formal standards activity related to possible VSB enhancements to

meet emerging broadcaster needs, an effort that Zenith is supporting.

SIGNIFICANT PROGRESS IS BEING MADE TO IMPROVE INDOOR RECEPTION

Zenith and other manufacturers acknowledge the inadequate multipath reception

performance of some first-generation DTV receivers. These problems are the result

of a shortcoming in the first generation of digital receivers, not a flaw in the 8-VSB

standard.13 Since the introduction of this first generation of receivers, Zenith and

other manufacturers have taken aggressive steps to improve indoor reception. Zenith recently demonstrated its third- and fourth-generation demodulator chips,

which show dramatic improvement in multipath performance for VSB receivers.

The need for such improvements is typical whenever a complex new technology

is implemented for the first time. It took decades for improved NTSC receiver designs to be refined and perfected, whereas DTV receiver refinements are being accomplished in just a few short years. Indeed, Zenith is confident that new generations of chips and receivers will continue to improve indoor reception, and other

manufacturers of DTV receivers and chips are making similar progress. A chart detailing the evolution of 8-VSB receiver performance is attached as an appendix to

my testimony. This ‘‘technology roadmap’’ illustrates that significant enhancements

are being made in each new generation of receivers (already vastly exceeding the

multipath performance of analog receivers), and that the issue of indoor reception

will soon be limited to only a handful of multipath environments with very poor

NTSC reception.14

CHANGING THE STANDARD WILL DISRUPT AND DELAY THE DIGITAL TRANSITION

The FCC has stated that a single transmission standard will ensure that broadcasters, equipment manufacturers and the public have sufficient confidence and certainty to promote the introduction of DTV service.15 The DTV standard has been

in place for almost four years and the transition to DTV is well underway. Any attempt to change the DTV transmission standard now would result in a multi-year

effort, requiring at least the development of a complete COFDM standard, the

achievement of an industry consensus on that standard, and extensive laboratory

and field testing. This would take years.

Moreover, the FCC has also noted that allowing more than one standard might

result in compatibility problems that could cause consumers and licensees to postpone purchasing DTV equipment, thereby leading to significant delay in the implementation and provision of DTV services to the public. Even the main proponent

of multiple standards recognizes this delay potential. According to Sinclair Broadcasting, multiple standards ‘‘would not only create chaos but would so fragment the

market so that no serious business could invest in the tooling to produce multiple

standard receivers into such a market.’’ 16 This delay in deployment is not consistent

with Congress’ intent in having a rapid rollout of DTV services.

Including COFDM in the transmission standard would require the development

of a severely modified spectrum use plan, system design and extensive research and

testing (both by all affected industries and the FCC) to determine COFDM’s interference characteristics and allowable transmission powers. Further study would

have to ascertain whether COFDM could support satisfactory service on VHF and

lower UHF channels due to impulse noise concerns.17 Moreover, COFDM’s power requirements for equal coverage and associated interference problems would require,

as I mentioned earlier, the DTV Table of Allotments to be re-analyzed and revised,

with little assurance that every existing broadcaster could be loaned a second channel for the DTV transition.

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18See Fourth Report and Order, 11 FCC Rcd at 17788.

Considering a change in the standard also threatens to freeze the development

and deployment of DTV technology by causing uncertainty for manufacturers who

must invest tens of millions of dollars in product development and who must be confident that they are designing to a standard that will guarantee a national purchasing base. Few manufacturers, chip designers or information providers would

continue to produce digital television products while a new, non-compatible standard

was being considered because of the considerable risks associated with this uncertainty.

The mere possibility of a change in the standard already is causing some broadcasters to postpone purchasing DTV equipment for fear that such equipment would

be incompatible. Moreover, if the standard were to change, existing DTV transmitters and receivers would need to be modified or could become obsolete, involving serious cost implications.

The confusion fostered by a potential change in the transmission standard is causing consumers to postpone their decisions to purchase DTV receivers, because they

do not want to invest in what might soon be an obsolete technology, or because they

believe different technologies could soon be available.18 Moreover, a change in the

standard would harm those consumers who already have purchased DTV equipment

expecting that their sets would have the capability to receive all existing over-theair channels, be transportable to other broadcast markets without diminished or

complete loss of functionality, and receive over-the-air broadcasts for many years to

come.

The lengthy delay inherent in a changed DTV transmission standard would do

much more than forestall the introduction of new innovations and services to the

public. It would be incompatible also with a key consideration of Congress in awarding additional spectrum to broadcasters—namely, the ability to auction spectrum recovered at the end of the DTV transition. Although the spectrum will not be recovered until broadcasters vacate it at the end of the transition, Congress has mandated that auctions for that spectrum commence this year so that the money raised

can be deposited in the nation’s treasury. If the end date of the transition is extended (as would be required by a change in the standard), it could detrimentally

impact the Federal budget by lowering the value of the spectrum to be auctioned,

because bidders would face extreme uncertainty as to when they may be able to utilize the spectrum for their own purposes.

STAY THE COURSE

The 8-VSB standard is achieving the principal goals for which it was selected: superior signal coverage to replicate existing service areas, a high bit-rate capacity,

and interference rejection. DTV receivers are improving significantly in their capability to handle multipath interference under the standard. This year, the FCC reaffirmed the 8-VSB standard by rejecting a petition seeking to add a European modulation scheme to the U.S. standard.

Changing the standard would lead to delay in deployment of digital television, impose costs on consumers, delay consumer purchases of DTV equipment, lead to viewers losing their signals, and delay the recovery of the spectrum allocated for the

transition (with resulting loss of revenues to be deposited in the Treasury).

Broadcasters in general and manufacturers are working to ensure that the digital

television deployment continues without disruption and complies with the timeline

set by Congress. Congress needs to ensure that broadcasters continue their progress

toward meeting these goals and meeting the demands by consumers for more digital

programming. Accordingly, there is no reason to reconsider the transmission standard. To do otherwise would needlessly disrupt the transition and delay the availability of digital television to American viewers.

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Mr. TAUZIN. Without objection. It is so ordered.

Mr. TAUZIN. We will now recognize Mr. Matt Miller, president

and CEO of NxtWave Communications in Langhorne, Pennsylvania. Mr. Miller.

STATEMENT OF MATT MILLER

Mr. MATT MILLER. Good morning, Mr. Chairman and distinguished members of this committee. I am Matt Miller. I am the

president and CEO of NxtWave Communications. Thank you for

this opportunity to address the technical issues and challenges facing digital television.

NxtWave’s primary business is designing and selling the chips

for digital TV sets that decode the digital signals. Our first chip,

the NXT 2000, decodes both the digital cable transmissions, QAM

and the digital over-the-air transmissions, 8-VSB. In my written

testimony, I have included data that show the improved performance of our second generation chip, the NXT 2002, which will be

available by the end of this year. This chip is designed for indoor

as well as outdoor over-the-air reception, and it also decodes digital

cable signals. We are also introducing a COFDM chip for the European DVB markets. So from a technical perspective, we understand

in great depth the pros and cons of both the COFDM and the VSB

standards being discussed in this country.

I am happy to have had the opportunity to show you our indoor

reception here in this room this morning using our first generation

product. We think it is very good. And our second generation chip

is going to be even better. In our industry, we typically leapfrog

ourselves once a year. PCs, modems, microprocessors, VSBD modulators. It is important to understand that the demonstration you

saw earlier was based on a standard which was established in

1996, which took nearly 10 years to development and a chip that

NxtWave began working on 21⁄2 years ago. That chip will be in consumer products this year, 2000. That is how long it takes to create

a standard and initiate production.

So what I want to emphasize today is with our testimony and

with our deployment, rollout time is the enemy. The standards we

have works and any radical change we introduce will simply bring

in unacceptable delay. We have heard much testimony here, a consumer market is emerging. There are many signals on air. DTV

broadcast signals already reach 60 percent of American households.

Manufacturers have introduced more than 100 different DTV products from fully integrated HDTV receivers and high resolution

monitors and digital set top boxes. Prices for consumer equipment

have decreased by up to 50 percent this year and will continue to

fall. And critical agreements have been reached between cable and

consumer electronics industry paving the way toward seamless

operability between broadcast DTV and cable systems.

The current standard works. Staying with the current standard

allows the U.S. to meet its digital service expectations years ahead

of any alternative path to deployment. After a decade of thorough

and technically rigorous research, the FCC chose 8-VSB modulation because of its superior power efficiency, large coverage area,

resistance to noise and interference present in the U.S. broadcast

environment.

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Concerns regarding its capabilities are misguided and do not

warrant reopening the decade-long standard setting process. Earlier this year, the Commission unanimously rejected a petition to

permit the use of a second noncompatible DTV transmission standard. The FCC correctly found that indoor reception difficulties to

date reflected deficiencies in early generation DTV receiver technology, not the standard itself. This is a critical distinction. Recent

field tests conducted by CBS, the FCC and others have shown that

these technical issues have been largely resolved. The natural evolution of technology and chip development in a hotly competitive

market will resolve any remaining reception issues. Already, manufacturers have introduced new technology; it improves DTV receivers, indoor reception performance to exceed that of analog TV, and

improvements will continue.

To revisit the standard at this late stage is not only unnecessary,

it would introduce a minimum of 2 years of delay to develop, test,

debate, negotiate review and approve an alternative standard, then

design the chips and build the products for the marketplace.

The standard can accommodate future consumer needs and service innovations. It was designed to enable broadcasters to introduce

the highest quality over-the-air broadcast digital television, but the

standard was designed to be flexible. It can accommodate multiple

channels of standard definition television, enhance digital interactive services and ancillary data casting services without causing

loss of analog services to consumers during the analog digital transition.

To the extent that the broadcasters’ needs change and they wish

to provide portable and/or mobile applications and are permitted to

do so, the DTV standard can be modified to accommodate these

services in a compatible way. These capabilities have not been fully

developed and exploited, not because the technology can’t provide

them, but because only recently were the applications suggested.

More high definition television programming is needed to accelerate this transition. Most of the programming transmitted on the

digital channel is just up-converted from analog. As a result the

digital picture isn’t any better than the original analog. The consumer experience has been far less compelling and attractive than

it could be. The dearth of free over-the-air HDTV programming is

perhaps the greatest threat to the DTV transition. It threatens to

damper consumer interest and investment in DTV, slow DTV

equipment and penetration, and delay the reclamation of broadcasters analog spectrum.

Some may think I am biased in favor of the current standard. I

am, because I understand its capabilities and what they can mean

for bringing new and better services to the American public in both

urban and rural areas. I also have a bias for action. I want to ensure that the U.S. remains the world leader in the industry we created and have nurtured for over a half a century. Pausing now for

years while we debate the intricacies of this or that standard is fiddling while Rome burns. The standard is fine. It does the job and

will accommodate future requirements. Let’s get on with it. Thank

you, Mr. Chairman. I would be pleased to answer any question you

or other members of the subcommittee may have.

[The prepared statement of Matt Miller follows:]

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PREPARED STATEMENT OF MATT MILLER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, NXTWAVE COMMUNICATIONS

Good Morning, Chairman Tauzin and distinguished Members of the Subcommittee. I am Matt Miller, President and CEO of NxtWave Communications.

Thank you for this opportunity to address the technical issues and challenges facing

the digital television industry.

NxtWave Communications, Inc.

NxtWave originated as a spin-off from the Sarnoff Corporation in 1996. We exist

for a single reason: to create chips that enable the best possible reception of digital

television signals. Our first chip, the NXT2000, decodes both digital cable (QAM)

signals and digital over-the-air broadcast (ATSC) signals. We also are introducing

a COFDM chip for the European DVB markets, so from a technical perspective we

understand in great depth the standards issues being discussed in this country.

Change is Never Easy

We are at the beginning of a new era in television broadcasting—the conversion

from analog to digital. This transition brings with it enormous opportunities for better and new services for America’s consumers. Broadcasters, programmers, equipment manufacturers, advertisers, and many others will share in creating and providing these services.

But change is never easy. When one heads in a new direction of this magnitude,

there always are questions, debates, and sometimes disagreements.

A Single Standard for DTV is Essential

First, let’s be very honest about one thing: both DVB, which is based in COFDM

technology, and ATSC, which is based in VSB technology, are fully suitable standards for excellent over-the-air reception. Each has different strengths and weaknesses, and engineers can and do argue about which is better for what applications.

To bring the benefits of digital technology to the American public, however, I submit that first and foremost, the most important aspect is to have a single standard

that works everywhere. The same TV set that works in Louisiana should work in

Massachusetts, and it should receive every digital broadcast station.

In the United States, our digital standard was developed by a united effort. In

1997, after a decade of thorough technical research, design, and prototypes the FCC

adopted the DTV standard unanimously recommended by industry. The industry

chose 8-VSB modulation after considering all alternatives because of its superior

power efficiency, reach to the extremities of our large service areas including rural

areas, resistance to the noise and interference present in the U.S. broadcast environment, and its ability to fit in with existing analog signals without impairing their

reception during the transition period.

Earlier this year, the Federal Communications Commission correctly reaffirmed

its decision by unanimously rejecting a petition to consider adding a European

standard based on COFDM technology as an alternative.

Time is the Enemy, Not the Standard

The current DTV standard is the best path to a quick transition to digital broadcasting. The 8-VSB DTV standard allows the U.S. to meet its digital television service requirements sooner and at lower cost than other alternatives. Considering

changes to the standard without compelling technical reasons will confuse the marketplace, delay the transition, and prevent timely recovery of the analog spectrum.

The risk and cost of delay greatly exceed the risk and cost of continuing to deploy

the DTV standard that we have. The fact is that it will take at least two to four

years to develop, test, debate, negotiate, review and approve any alternative broadcast standard. Then, either interference studies with analog and the current 8-VSB

signals would have to be conducted and a completely new Table of Channel Allotments constructed, or digital broadcast service areas would have to be made smaller

than the analog service areas to prevent destructive interference. This would impair

reception especially by rural consumers who could be left without digital reception

and all the new services enabled by digital technology.

Those advocating an alternative standard ignore the reality of the lengthy deliberative process necessary to adopt a standard and the technical complexity of having

analog NTSC, digital 8-VSB, and digital COFDM signals all having to share the

limited number of channels. With just two standards it took two years to figure out

acceptable allotments so that consumers would not lose over-the-air service.

Specifically, the most recent comparative tests between the U.S. DTV standard

and that of Europe confirmed previous findings that a significant (3-5 dB) difference

exists with regard to the signal strength needed to receive the signal. This increase

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in power needed for COFDM to equal VSB coverage would create additional interference not heretofore contemplated unless either (1) broadcasters agree to keep

their maximum peak powers at previous levels, in which case signals to suburban

and rural areas will fall off before the stations’ NTSC signals; or (2) stations are

required to tolerate the increased interference from other stations, which also would

impair reception. Neither of these scenarios augurs well for a rapid and successful

transition to digital television.

So, what would be the benefit of two digital standards, or of replacing one with

another? If a standard was inadequate to enable reception, that would be one thing.

But the best engineers have conclusively determined that the VSB standard is different from COFDM in a critical area: it is fully capable of delivering superior reception at greater distance. Thus the selection of VSB for the U.S., where our service

areas are extremely large and where we value bringing all communications services

to distant rural areas. Indeed, we currently use VHF channels 2-13 in particular

to cover rural areas, and VSB has clear advantages due to the noise and other interference on these channels. Rural areas tend to rely more on over-the-air TV signals

because typically they have less coverage by cable.

The VSB standard also minimizes interference with the analog NTSC signals that

remain during the transition period. It was a fundamental precept that the new digital signals not interfere with existing analog signals during the transition so that

consumers would not be harmed.

Concerns About Reception Are Misplaced

In 1998, NxtWave’s engineers understood that reception of ATSC-compliant signals was not meeting its theoretical limits. We analyzed the reasons for this, specifically analyzing whether something intrinsic to the standard itself was the cause, or

whether there were basic problems with implementing the standard in transmitters

and receivers. We concluded that the standard itself is sound and fully capable of

delivering the service intended.

NxtWave’s analysis of the first receiver designs and decoder chips concluded that

they did not deal adequately with actual over-the-air signal reception in some situations, including certain multipath environments. But equally as important,

NxtWave’s analysis found that reception IS enabled by the DTV standard; receiver

implementation, not the standard itself, required improvement. Our conclusion was,

and continues to be, that the ATSC DTV Standard provides a robust signal that is

readily viewable with appropriate decoding and has specific advantages for the U.S.

market.

Beginning in 1998, NxtWave devoted significant resources to developing better demodulation chip designs to meet what it perceived would be consumer demand for

better over-the-air reception than provided by early consumer equipment implementations. Our first chip, the NXT2000 announced in August 1999, exceeded the performance of previous ones in the market. Based upon experience with our first chip,

we are finishing our design improvements for our second chip, which is scheduled

to be available by the end of the year. Like other chipmakers in this very competitive field, we are racing to produce future generations of chips in order to ensure

that consumers achieve flawless reception that replicates the theoretical coverage of

the standard.

Changed Service Demands Also Can Be Accommodated Without Impairing the

Standard

Recently I have participated in meetings at the ATSC to address the capabilities

and reception issues associated with the DTV standard. In addition, I have had numerous discussions with all sectors of the affected industries, including broadcasters. From this, I have concluded that some broadcasters are seriously considering business models that contain new services, such as datacasting, intended to

reach portable, and even mobile, receivers. NxtWave is fully prepared to work with

interested parties and devote its substantial expertise to enabling these applications

by using the most efficient methods that are backward compatible with the current

DTV standard if broadcasters intend and are permitted and act to provide such

services.

When the ATSC standard was adopted in 1996, broadcasters unanimously supported it and expressed no desire to implement a multi-tiered service. Instead, a

fixed standard that maximizes data rate was chosen.

More recently, broadcasters appear to be focusing more on data for portable and

even mobile uses, at the expense of transmitting full high definition programming.

The DTV standard can support flexible insertion of encoded auxiliary data packets

to be received with-portable devices without disrupting the existing installed base

of consumer receivers. NxtWave engineers have developed a two-tiered ATSC-comVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00068 Fmt 6633 Sfmt 6621 E:\HEARINGS\65906 pfrm04 PsN: 65906
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1See Comments of NxtWave Communications in MM Docket No. 00-39 (May 17, 2000). 2The NXT2000 was developed prior to the availability of off-air DTV signals.

pliant extension that multiplexes robust data packets with standard packets so that

there is no effect on existing transmitters and receivers. A two-tiered service is possible with reception at signal levels well below those attainable with the DVB-T

standard, for example. We gave more detail on this in our comments submitted to

the FCC in their DTV biennial review proceeding.1

NxtWave is a technology enabler. The DTV standard was not designed for some

of the applications now being envisaged—not because doing so was impossible, but

rather, at the time broadcasters and other stakeholders were not interested in such

applications. At that time, the consensus was to emphasize maximum capacity (data

rate) and efficient coverage. If such services are permissible and broadcasters want

to provide them, the current standard is capable of supporting them.

Improved Performance is Reality

To be honest, DTV reception today works in places where my cellphone fails and

analog TV reception is far from ideal, including this room. But there remains substantial headroom for future improvements to the standard even yet.

Our NXT2000 high-speed demodulator chip was introduced in August 1999 for

Digital Television (DTV) broadcast and cable receivers. It enables reliable reception

of DTV broadcast of digital signals compliant with the standard. Digital signals on

cable systems also can be demodulated using the same chip, thereby enabling compatibility. The NXT2000 uses advanced equalization, synchronization, and error correction techniques newly designed in 1998.

Our second-generation demodulator chip will be available in the fourth quarter

of 2000. This chip will significantly advance reception capabilities in severely distorted, time-varying propagation conditions. These performance improvements, due

to advances in channel equalization, will improve indoor and portable reception even

more. Studying reception of the multiple broadcast signals that became available

with the roll-out of digital signals starting in November 1998 has greatly facilitated

analyses of reception conditions.2

Figure 1 demonstrates our improved performance and compares our performance

to COFDM chips. It includes performance curves for four systems: the current generation ATSC-professional unit, the NxtWave second-generation chip, and both the

2K and the 8K COFDM modes compliant with the European DVB-T standard.

Figure 1: These curves show the Carrier-to-Noise Ratio (‘‘CNR’’) required to reach

Threshold of Visibility (‘‘TOV’’) four systems with a single echo at +1 usec. DVBT and ATSC data is from Brazil laboratory measurements. NxtWave secondgeneration chip data is obtained using sampled RF data that is passed into a

computer model of the chip.

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Figure 1 also demonstrates that the ATSC system operates with low signal levels

at which COFDM reception fails.

Figure 2: These curves show performance of four systems when a single echo at +4

usec suffers a doppler frequency offset. DVB-T and ATSC data is from Brazil laboratory measurements. NxtWave second-generation chip data is obtained using

sampled RF data that is passed into a computer model of the chip.

The NxtWave second-generation chip also will out-perform the current generation

ATSC receiver in all relevant aspects. The results depicted in these two figures

above demonstrate that the NxtWave second-generation chip will enable ATSC-compliant reception by portable devices such as laptops and hand-held communicators.

To accomplish the superior 8-VSB performance in Figures 1 and 2 and maintain

cost-effective chip implementation, NxtWave engineers collected and analyzed numerous data records from over-the-air DTV broadcasts. The chip architecture and

hardware implementation of the NXT2000 are modified in the NxtWave second-generation chip for substantially improved indoor reception. NxtWave engineers also

have developed, and continue to develop, advanced architectures and algorithms

that will be economically feasible. This trend is analogous to the 5-year-old, 300-

baud modem that has evolved into today’s 56-kilobaud standard, as predicted by

Moore’s Law. NxtWave’s future generations of demodulators will use more sophisticated and accurate signal processing solutions. This will provide consumers with

nearly-unbreakable ATSC reception, while maintaining full backward compatibility

with all existing digital receivers.

Our results have been validated repeatedly in the field. Recent field tests conducted independently by CBS (reported in ‘‘DTV Reception Field Tests,’’ National

Association of Broadcasters, Las Vegas, NV, April 12, 2000) used the NXT2000 and

other current generation demodulators. These tests conclude that the current generation of DTV receivers already replicate viewable analog NTSC coverage. Moreover, since the demodulator chip is only one component of a highly-integrated system, albeit a key component, improvements in other system areas such as the RF

tuner, together with a competitive industry fueled by the potential of an emerging

market, guarantee that future generation receivers will provide the consumer with

exceptional ATSC-compliant reception.

Conclusion

Some may conclude that I am biased in favor of the current standard. I am, because I understand its superior capabilities and what they can mean for bringing

67

new and better services to the American public in both urban and rural areas. I

head up a broadband communications company that makes products that support

the ATSC DTV Standard. But in fact, we also make products that support the alternative DVB COFDM standard. NxtWave is a company of communications scientists.

We build products compliant with the standards of the countries in which we work.

I am biased, but not for one standard or another. Rather, my bias is simply to

ensure that the U.S. remains the world leader in the industry we created and have

nurtured for over half a century. Pausing now for years while we debate the intricacies of this or that standard is equivalent to ‘‘fiddling while Rome burns.’’ Our DTV

standard is fine, it does the job, and it will accommodate future requirements. Let’s

get on with it.

Thank you, Mr. Chairman. I would be pleased to answer any questions you or

other members of the Subcommittee may have.

Mr. TAUZIN. Thank you Mr. Miller.

Next we are pleased to welcome Mr. Richard Green of Cable TV

Laboratories in Louisville, Colorado.

STATEMENT OF RICHARD R. GREEN

Mr. GREEN. Thank you, Mr. Chairman, members of the subcommittee. My name is Richard Green. I am president and CEO

of Cable TV Labs. Thank you for providing me with this opportunity to comment on the cable industry’s role in facilitating inner

operability and the transition to DTV.

Thirteen years ago I had the privilege of testifying before this

committee on the subject of HDTV. I was, at that time, and still

remain today, an enthusiastic advocate of digital television technology. Although it has taken longer than any of us anticipated, I

believe that we are on the right course and are making effective

progress toward a successful induction of a compelling digital and

high definition service to the American people.

I believe that the cable industry deserves more recognition than

it gets for its leadership role in implementing DTV. Cable conditions have been working on the transition to digital television since

1988. Today the largest multichannel digital video facility in the

world is owned and operated by a cable company, AT&T

Broadband. On the programming side, HBO is already providing

more HDTV programming in any given week than all the broadcast

networks combined. Cable operators are upgrading to digital transmission and are offering an increased range of new services. At

present, over 7 million homes subscribe to digital cable, a number

that is expected to reach 10 million by the end of the year. Set top

boxes being developed this year will marry digital programming,

high speed data and Internet content for display on both analog

and digital TV receivers.

At Cable Labs, the most important effort that we have ever undertaken is the transition to digital television. For example, our

open cable project seeks to develop a new generation of digital set

top boxes that are interoperable and offer a new range of services

to the consumer. Open cable is also being used to develop specifications to meet many of the FCC’s navigation device requirements.

A goal of this effort is to keep the time required to develop new

equipment to a minimum. We do this by working with equipment

designers and manufacturers to cooperatively prepare specifications

and reduced risk in development time. It is an open community

process bringing together more than 400 companies to prepare and

approve the various specifications.

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1 CableLabs was founded 12 years ago to ensure the proper development of technological initiatives for the cable television industry. CableLabs represents more than 90 percent of the cable

customers in the United States and 85 percent of customers in Canada.

The FCC has asked the affected industries to help reduce the

technical barriers to the delivery of digital and high definition television. It has offered companies a chance to develop marketplace

solutions rather than have to comply with government and post

standards for digital TV. The cable industry is committed to help

resolve compatibility problems that exist between cable distribution

systems and television receivers, and to do so within the framework of inner industry solutions.

Toward this end, the National Cable Television Association and

the Consumer Electronics Association reached agreement on February 22 of this year. This agreement allows future digital television sets to be connected directly to cable systems. The agreement details the technical specifications that will enable consumers

to receive DTV programming and services over the capable system.

On May 24th, CEA and NCTA further announced they had

reached an agreement on labeling information that will aid consumers in their purchase of new digital television equipment. Consumers will benefit from this agreement because they will know exactly what to look for when they purchase a new digital television

receiver. No longer will ambiguous terms like ‘‘cable ready’’ cause

consumer confusion. The two industries have agreed to continue

their labeling discussion and hope to reach agreement on labels for

other equipment, including digital set top boxes that will work with

interactive DTV receivers.

We look forward to continuing with CEA and other industry

groups, including the consumer electronics retailers, to ensure that

consumers have a wide range of clearly labeled equipment from

which to choose. We also continue to believe that these interindustry agreements are preferable to the imposition of government requirements in what is a dynamic and fast-changing market.

I thank you, Mr. Chairman. I will stand ready to answer questions.

[The prepared statement of Richard R. Green follows:]

PREPARED STATEMENT OF RICHARD R. GREEN, PRESIDENT AND CEO, CABLE

TELEVISION LABORATORIES, INC.

INTRODUCTION

Mr. Chairman, Mr. Markey, members of the subcommittee, my name is Richard

R. Green and I am President and CEO of Cable Television Laboratories, Inc.

(CableLabs), which is located in Louisville, Colorado. CableLabs is a research and

development consortium supported by cable companies operating in North America

and helps chart the industry’s course in matters of technology.1 It has played an

active role in cable’s deployment of digital television (DTV), setting standards for

cable modems, and ensuring the availability of interoperable set-top boxes at retail

stores. Thank you for providing me with this opportunity to comment on the cable

industry’s role in facilitating interoperability and the transition to DTV.

Mr. Chairman, you may remember that fourteen years ago I had the privilege of

testifying before this committee on the same subject that we are considering today.

In 1986, I helped conduct a demonstration of the transmission of High Definition

Television (HDTV) from Ottawa, Canada, to Washington D.C. That occasion was the

first international exchange of digital high definition programs. You may also remember that I was at that time—and still remain today—an advocate of digital television technology. Although it has taken longer than any of us anticipated, I believe

that we are on the right course and are making effective progress toward a successful introduction of compelling digital and HDTV service to the American people.

69

I believe that the technical and economic problems associated with the introduction of DTV are no different than what we have seen in the past with similar technologies and that the problems are being solved. The progress is not as rapid as

we had hoped, but I would like to discuss the work that is being done in this important area.

You may recall that in the case of the introduction of color television, acceptance

was slow. The penetration of color receivers took about 8 to 10 years to reach significant levels. So it is not unusual to find that new technologies often take considerable time to reach meaningful economic penetration. Also, the issue of DTV is more

complex than the transition to color. We should remember that when color television

was introduced, the technical issues could be solved by negotiations among a few

participants. The major stakeholders were broadcasters and TV manufacturers. Indeed, color television was largely the product of a single company, RCA. During the

introduction of color, issues of production, transmission, and the manufacturing of

TV sets could be resolved within one company. Today, there are many stakeholders.

Multiple industries are affected by the developments in DTV—not just broadcasters

and TV manufacturers. The cable, satellite, computer, content development, and

consumer electronics industries all have important stakes in the introduction of digital television and HDTV.

CABLE HAS PLAYED A LEADERSHIP ROLE IN THE TRANSITION TO DIGITAL TV

The most important effort that we have ever undertaken at CableLabs is the transition to digital television. Indeed, I believe that the cable industry deserves more

recognition than it gets for its leadership role in implementing DTV.

Cable companies have been working on the transition to digital television since

1988. The industry published what I believe was the first specification for digital

video compression equipment for consumers’ homes nine years ago in March 1991.

Cable companies have been offering digital video service for the last five years. General Instrument (now part of Motorola) first developed the digital compression technology that is at the heart of the broadcast ATSC standard for the cable industry.

It was General Instrument’s proposal that made digital HDTV feasible. Similarly,

the largest multi-channel digital video facility in the world is owned and operated

by a cable company, AT&T Broadband. On the programming side, HBO is already

providing more HDTV programming in any given week than all the broadcast networks combined. Showtime, Madison Square Garden, A&E, and Discovery are also

producing high definition programming. So, as an industry, cable has been at this

a long time and can boast a track record of success in developing and deploying digital video technology.

It is also clear that digital television is a technology that the cable industry takes

very seriously and continues to deploy as quickly as possible. Cable operators are

upgrading to digital and offering an increasing range of new services. At present,

over 7 million homes subscribe to digital cable—a number that is expected to reach

10 million by the end of this year. Set-top boxes being deployed this year will marry

digital programming, high-speed data, and Internet content for display on both analog and digital TV receivers. And customer satisfaction is high: a survey released

by the Cable and Telecommunications Association for Marketing (CTAM) showed

that 95 percent of customers polled expressed their satisfaction with cable’s upgraded digital service.

CABLELABS PROJECTS

Let me say a word about the three major CableLabs projects currently underway.

The current portfolio of research and development projects at CableLabs includes

the OpenCable initiative and development of cable modem and PacketCable specifications. CableLabs is also involved with home networking specifications, which I

will not address here.

CableLabs Certified Cable Modems/DOCSIS

The CableLabs Certified TM Cable Modems project, formerly known as Data Over

Cable Service Interface Specification or DOCSIS, defines interface requirements for

cable modems. The certified cable modem project provides cable modem equipment

suppliers with a method for attaining cable industry acknowledgment of DOCSIS

compliance. The process results in high-speed modems being certified for retail sale.

The DOCSIS project is four years old, and the DOCSIS specification is an international ITU standard. Currently there are over 50 manufacturers of modems, and

a competitive retail market for the sale of these modems is emerging in the U.S.

and overseas. We hope that the cable modem process will serve as a model for the

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certification of digital set-top boxes which are made commercially available at retail

stores.

PacketCable

PacketCable TM is a project aimed at identifying, qualifying, and supporting Internet-based voice and video products over cable systems. These products will represent new classes of services, including telephone calls and videoconferencing over

cable networks and the Internet, utilizing cable-based packet communication networks.

OpenCable

Our OpenCable project seeks to develop a new generation of digital set-top boxes

that are interoperable and offer a new range of services to consumers. OpenCable

is also being used to develop specifications to meet many of the FCC’s ‘‘navigation

device’’ requirements. A goal of this effort is to keep the time required to develop

new equipment to a minimum. We do this by working with equipment designers and

manufacturers to cooperatively prepare specifications that reduce risk and development time. It is an open community process bringing together more than 400 companies to prepare and approve the various specifications.

The OpenCable process applies to a family of consumer devices. Although the initial focus was on advanced digital set-tops, we expect this functionality to migrate

quickly to television receivers and other consumer electronic devices such as DVDs

and DVCRs, with the set-top functionality ‘‘integrated’’ into the equipment. In fact,

one exhibitor at the 1999 Western Show demonstrated a personal computer that

used an OpenCable-compliant POD (Point Of Deployment security card) to access

cable services for display on the PC screen.

The OpenCable team has worked very hard to take the experience of the DOCSIS

effort and apply it in the design of the OpenCable process. It is not an exact fit—

the set-top environment is more complex and has a set of security and legacy equipment issues that were not problems for DOCSIS. But we certainly believe that the

some key aspects of the DOCSIS process are directly relevant:

• Our commitment to an open, collaborative, inter-industry process.

• Inclusion of vendors as specification authors and true partners.

• Providing a neutral venue for development work.

• Providing a feedback loop between equipment development and refinement of

specifications.

• Building a strong consensus within the cable industry on cable’s technical needs.

As such, CableLabs has a process that offers a win-win future to the other industries involved in developing digital television. It is my hope that the cable, computer, broadcast, and consumer electronic industries—as well as content providers—

will continue to support this effort, recognizing that the current convergence of technology leads to a convergence of economic self-interest. We will make digital television easy-to-use for the customer. We have addressed and will implement systems

to protect the copyright of content providers. Through this infrastructure, we will

be able to provide easily accessible digital television and the compelling content that

customers desire.

STATUS REPORT ON THE DEVELOPMENT OF DIGITAL TV

The FCC has asked the affected industries to help reduce the technical barriers

to the delivery of digital and HDTV television. It has offered companies a chance

to develop marketplace solutions rather than have to comply with government-imposed standards for digital TV. The cable industry is committed to help resolve compatibility problems that exist between cable distribution systems and television receivers—and to do so within the framework of voluntary, negotiated solutions.

The Need for Copyright Protection

If a first-run digital program can be immediately recorded and replicated in perfect copies or webcast (without payment to the copyright holders), developers are not

going to release their product for distribution. At CableLabs, we are working to provide a technological framework that can be supported by a legal environment in

which producers and the content community can be reasonably assured that their

products will not be stolen. This is not to say that customers do not have a right

to record material for their own use. Indeed, home recording is fundamental to customer satisfaction. However, we need to provide the technical tools that will allow

legal duplication and use while preventing pirate duplication and distribution.

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1394 Interface: Background

In the past, home video equipment has been connected to television sets using

channel 3 or 4. Many existing set-top boxes and video recorders work that way, but

these devices are all analog. The new generation of home equipment is, of course,

digital. So we must have an equivalent interconnection for TV sets in the digital

age. In other words, in the digital world, a DVD player or a digital set-top box

should connect to a digital TV set via a digital plug. This is the only way to preserve

the original quality of the material.

A consensus among industries has singled out the IEEE 1394 interface as the

method of choice for connecting digital equipment to the TV set. The cable industry

has supported that choice and has specified 1394 connectors in the current purchase

orders for our own digital set-tops. Also, we have included in our OpenCable specification an additional requirement that the cable 1394 connectors include digital

copy protection technology called 5C. We have done this in order to preclude

pirating of the pristine digital pictures. However, we cannot require this technology

on equipment we do not own. Therefore, we have tried to persuade the consumer

manufacturers to include the 1394 connector with 5C on digital television receivers.

Many manufacturers have indicated that they will build to our specification; others may choose to build sets without this technology. We believe that the latter

choice is a mistake since it will lead to customer confusion about interoperability

between cable services and television sets. It also will produce TV sets that may not

connect to all digital video home equipment in the future. However, as I discuss

below, the cable industry has reached a compromise with manufacturers on this

issue.

Inter-Industry Agreement on Interoperability, February 22, 2000

The National Cable Television Association (NCTA) and Consumer Electronics Association (CEA) reached voluntary agreements on February 22, 2000, that will allow

future consumer digital television sets to be connected directly to digital cable systems (see attached letter from Robert Sachs and Gary Shapiro to FCC Chairman

William Kennard). The agreements detailed the technical specifications that will enable consumers to receive DTV programming and services over cable systems. As

Robert Sachs, President of NCTA, noted:

This is good news for cable customers contemplating a purchase of a digital

television receiver. The cable and consumer electronics industries now have

specifications that ensure that signals transmitted on cable will be easily

viewed on digital sets. This voluntary solution makes unnecessary government

involvement in setting compatibility standards for the dynamic digital TV marketplace.

Similarly, Gary Shapiro, President and CEO of CEA, stated:

While our industries celebrate today’s announcement, the true winner is the

American consumer. With these agreements, many more consumers will soon be

able to access the wonders of digital television through cable. This is yet another giant step forward in the transition to DTV. Indeed, all parties with a

true interest in the success of DTV should celebrate today.

The agreements detail the technical requirements that permit the direct connection of digital television receivers to cable television systems, specifying the signal

levels and quality as well as video formats. They also provide for the carriage of

data which support on-screen guide functions in digital receivers. With roughly twothirds of U.S. households receiving television programming via cable, the February

22 agreements mark an important milestone in the transition to digital television.

Inter-Industry Agreement on Labeling, May 24, 2000

On May 24, CEA and NCTA announced that they had reached agreement on labeling information that will aid consumers in their purchase of new digital television equipment (see attached letter from Robert Sachs and Gary Shapiro to William Kennard). The CEA-NCTA agreement establishes the labeling that is to be

used to inform consumers about the capability of various digital television sets to

receive digital and interactive TV services. The May 24 agreement does not require

every digital TV set to include a 1394/5C connector allowing reception of the full

range of cable interactive services. However, all sets will be packaged with consumer information describing the features and functions of television sets with and

without the 1394/5C connector. The descriptive information will appear in consumer

electronics product manuals and brochures.

Under the May 24 agreement, all digital sets will be capable of receiving both

analog and digital programming from a digital cable system. In addition, digital TV

sets with full interactive capabilities will be labeled ‘‘Digital TV-Cable Interactive.’’

Digital sets that lack these capabilities will be labeled ‘‘Digital TV-Cable Connect.’’

72

Sets labeled ‘‘Digital TV-Cable Connect’’—those without the 1394/5C connector—will

be capable of receiving analog basic, digital basic, and digital premium cable programming from any cable system that offers digital service. ‘‘Digital TV-Cable Interactive’’ sets (those with the 1394/5C connector), in conjunction with a digital set-top

box, will be able to receive those services and other programming—including impulse pay-per-view, video-on-demand, enhanced program guides, and data enhanced

television services.

In announcing the agreement with CEA, Robert Sachs noted:

We’re pleased to take this further step in the transition to digital television.

Consumers will benefit from this agreement because they will know exactly

what to look for when they purchase a new digital TV receiver. No longer will

ambiguous terms like ‘‘cable ready’’ cause consumers confusion.

CEA’s Gary Shapiro agreed:

With this agreement, we have now passed one more milestone on the road

to DTV. As our industry brings new DTV products into the marketplace based

on this agreement, consumers will have full access to the spectacular picture,

sound, and interactive features of digital television via their digital cable system.

CEA and NCTA have agreed to continue their ‘‘labeling’’ discussions and hope to

reach agreement on labels for other equipment, including digital set-top boxes that

will work with the ‘‘Digital TV-Cable Interactive’’ DTV sets.

We look forward to continuing our work with the CEA and other industry groups

(such as consumer electronics retailers) to ensure that consumers have a wide range

of clearly labeled equipment from which to choose. We also continue to believe that

these inter-industry agreements are preferable to the imposition of governmental requirements in what is a dynamic and fast-changing market.

CONCLUSION

In dealing with the complex give-and-take issues that characterize digital television, no one side can have it all. None of the industries involved can afford to come

up empty-handed on an issue as vital as the digital future. However, with continued

cooperation and compromise from all parties, industry should be able to find negotiated solutions which obviate the need for federal regulatory intervention. In particular, the cable industry will continue to work hard to resolve questions arising

from its labeling and interoperability agreements with consumer electronics equipment manufacturers and retailers as all sides press forward to bring new digital

services and technologies to market.

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74

75

Mr. TAUZIN. Thank you very much, Mr. Green.

Now we are pleased to welcome Mr. Robert Miller, New York,

New York, the president of Viacel. I understand Viacel is a data

network.

STATEMENT OF ROBERT T. MILLER

Mr. ROBERT MILLER. Mr. Chairman and members of the subcommittee, Viacel Corporation is a data broadcaster. Viacel believes

that DVBT COFDM is a revolutionary broadcast technology that

will allow the rebirth of over-the-air broadcast television. Poor television reception gave rise to both the cable and satellite industries.

Today, up to 85 percent of viewers define television as cable or satellite.

8-VSB modulation perpetuates the failing NTSC system. 8-VSB

is even retrograde. It denies mobile television reception that we

enjoy today. Congress should mandate mobile reception capability.

COFDM supports mobile television reception in the buses of Singapore and the high speed trains of Europe. The taxicabs and subways of New York City could receive HDTV today using the powerful tools of the revolutionary COFDM DVBT standard. I know of

no New Yorker who even tries to receive broadcast television.

Multipath scrambles both NTSC and 8-VSB. Until Viacel tested

COFDM, we could not get anything to work in the real world of

New York City.

However, our COFDM tests results were wildly beyond our expectations. COFDM worked better specifically in those very locations where everything else had failed, including my cell phone. In

the shadow of the Empire State Building where 200,000 watt

transmitters blast unreceivable 8-VSB HDTV down on New Yorkers from 1100 feet, we tested COFDM. We, however, were broadcasting 22 miles out on Long Island from a 240-foot antenna with

1 percent of the power used by the 8-VSB stations. There was no

line of sight. In fact, our first day of test we were driving on Park

Avenue, 5th Avenue and Lexington Avenue in midtown Manhattan

with 50-story buildings on either side of the street at right angles

to and blocking any direct signaling from the transmitting tower.

We were also moving at 40 miles an hour. We used simple bow tie

and monopole antennas from Radio Shack. They both worked.

When you think of data casters, you may think of e-mail and

stock quotes. In fact, HDTV is data and in the digital world, all

broadcasters are data casters. On that day in New York when we

first tested COFDM, we data cast a movie that filled a 15-inch

screen on a laptop with full color and CD quality sound using

Internet protocol.

All of Manhattan could have been watching HDTV on that channel at the same time with COFDM and simple indoor antennas.

Few people can watch free over-the-air television in Manhattan

today. With COFDM, they could watch all 30 stations that broadcast there now in taxicabs, subways and offices and at home.

8-VSB proponents are quick to write off the inner cities. I live

in New York and I want HDTV. 8-VSB proponents tell us city

slickers, poor and rich alike, that we will just have to be happy

paying the cable and satellite companies for our free advertisersupported TV. No free HDTV over the air for us. How can we simVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00079 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
76

ply write off the cities by continuing with this defective 8-VSB

modulation standard? There is a fixed rate VSB right now and it

is called COFDM. When, off the record, most engineers Viacel has

dealt with see 8-VSB as a peculiar American political disease that

has nothing to do with the underlying technology and everything

to do with powerful and foreign special interest. Congress correctly

specified that a signal equal to the current NTSC signal must be

broadcast free. And that the extra spectrum can and should be

used for data services.

HDTV is a seductive product. The market will demand it. Congress should allow COFDM. The competition between COFDM and

8-VSB would spur the rollout of HDTV like nothing that Congress

could mandate. The passion in this room should tell us that.

By the way Viacel’s business plan is a free data casting service

including a free receiver, in the same spirit as a current free over

the air broadcasting. What an amazing revolutionary concept.

COFDM actually allows you to simply and reliably receive an over

the air TV signal. Maybe it is hard for some to grasp that concept

since we have lived with faulty reception for so long.

There are a lot of canards being put out against COFDM. Congress should look past them and make sure that the tests now

being conducted in Washington by MSTV comparing COFDM and

8-VSB continue, are fair and that the results are fully aired. The

people do not want a modulation standard, they want great TV.

Thank you.

[The prepared statement of Robert T. Miller follows:]

PREPARED STATEMENT OF ROBERT MILLER, PRESIDENT, VIACEL CORPORATION

Mr. Chairman and members of the Subcommittee, my name is Bob Miller and I

am the President of Viacel Corporation.

Viacel Corp. is a data-broadcaster. Viacel believes that DVB-T COFDM is a revolutionary broadcast technology that will allow the rebirth of over the air broadcast

television.

Poor television reception gave rise to both the cable and satellite industries. Today

up to 85% of viewers define television as cable or satellite.

8-VSB modulation perpetuates that failing NTSC system. 8-VSB is even retrograde, it denies mobile television reception that we enjoy now. Congress should

mandate mobile reception capability. COFDM supports mobile television reception

in the buses of Singapore and the high speed trains of Europe. The taxicabs and

subways of New York City could receive HDTV today using the powerful tools of

the revolutionary COFDM DVB-T Standard.

I know of no New Yorker who even tries to receive broadcast television. Multipath

scrambles both NTSC and 8-VSB. Until Viacel tested COFDM we could not get anything to work in the real world of New York City.

However, our COFDM tests results were wildly beyond our expectations. COFDM

worked better specifically in those very locations where everything else had failed,

including my cell phone. In the shadow of the Empire State Building where 200,000

watt transmitters blast unreceivable 8-VSB HDTV down on New Yorkers from 1100

ft. we tested COFDM.

We, however, were broadcasting 22 miles out on Long Island from a 240 ft. antenna, with 1% of the power used by the 8-VSB stations.

There was no line of sight. In fact on our first day of test we were driving on Park

Ave., Fifth Ave., and Lexington Ave. in Midtown Manhattan with fifty story buildings on either side of the street at right angles to and blocking any direct signal

from the transmitting tower. We were also moving at up to 40 mph. We used simple

bow tie and monopole antennas from Radio Shack. They both worked.

When you think of data-casters you may think of e-mail and stock quotes. In fact

HDTV is data and in the digital world all broadcasters are data casters. And on

that day in New York when we first tested COFDM we data-cast a movie that filled

a 15 inch screen on a laptop with full color and CD quality sound using IP (Internet

Protocol). All of Manhattan could have been watching HDTV on that channel at the

77

same time with COFDM and simple indoor antennas. Few people can watch free

over the air television in Manhattan today. With COFDM they could watch all thirty stations that broadcast there now, in taxicabs, subways, offices and at home.

8-VSB proponents are quick to write off the inner cities. I live in New York and

I want HDTV. 8-VSB proponents tell us city slickers, poor and rich alike, that we

will just have to be happy paying the cable and satellite companies for our free advertiser supported TV. No free HDTV over the air for us. How can we possibly write

off the cities by continuing with this defective 8-VSB modulation standard? There

is a fix for 8-VSB right now and it is called COFDM.

When off the record, most engineers Viacel has dealt with see 8-VSB as a peculiar

American political disease that has nothing to do with the underlying technology

and everything to do with powerful and foreign special interest.

Congress correctly specified that a signal equal to the current NTSC signal must

be broadcast free and that the extra spectrum can and should be used for other data

services. HDTV is a seductive product, the market will demand it. Congress should

allow COFDM. The competition between COFDM and 8-VSB will spur the rollout

of HDTV like nothing that Congress could mandate. The passion in this room

should tell us that.

By the way, Viacel’s business plan is a free data-casting service including a free

receiver, in the same spirit as current free over the air broadcasting.

What an amazing and revolutionary concept! COFDM actually allows you to simply and reliably receive an over the air TV signal. Maybe it is just to hard for some

to grasp that concept since we have lived with faulty reception for so long.

There are a lot of canards being put out against COFDM. Congress should look

past them and make sure that the tests now being conducted in Washington by

MSTV comparing COFDM and 8-VSB continue, are fair and that the results are

fully aired.

The American people do not want a modulation standard, they want great TV.

Thank you.

Mr. TAUZIN. Thank you, Mr. Miller.

Next we will have Mr. Gary Chapman. CEO and president on

LIN Television Corporation.

Mr. Chapman.

STATEMENT OF GARY CHAPMAN

Mr. CHAPMAN. Thank you, Mr. Chairman. If you and I were to

go to a consumer electronics store here in Washington and we

wanted to buy a digital television set, you think it would be easy.

We just walk in, tell them what you want, take it home, hook it

up. Hook it up, right? Wrong. What you would find is the following:

Most digital sets don’t get digital signals off air without a set top

box at additional cost. When you try to hook it up, our set to cable,

it probably would not work. Even if it did work with cable, it still

wouldn’t receive the five digital broadcast stations already on-theair because local cable doesn’t carry those signals in Washington,

DC.

My point is there are huge obstacles that lie in the path of consumer acceptance of DTV. Unless the FCC moves forward quickly

to resolve these issues, the public will be denied access to DTV.

The FCC should do the following three things right now to resolve

this consumer problem: First, adapt new carry and retransmission

consent rules to digital service. Second, require interoperability of

DTV with cable and devices like VCR’s. And last, create minimum

performance levels for digital television sets.

Broadcasters are working hard on the transition to digital. Nearly 150 stations broadcast digital signals, reaching two-thirds of

Americans. Broadcasters are ahead of the schedule in rolling out

DTV service. We estimate some $750 million has already been

spent by the first wave of stations. My own company already inVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00081 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
78

vested $22 million on transmission equipment alone. We will need

another $30 million to complete that part of the job. Then we need

to spend more money to convert news gathering, studio, master

control, and editing equipment. The fact is, broadcasters are doing

their part. More stations go on-the-air every day. More digital programming is being produced and provided to consumers.

Unfortunately, our partners in this enterprise are falling short.

We don’t have sets that will receive digital signals or cable systems

that both carry our signal and allow consumers to watch them. We

also don’t have an FCC that is implementing Congressional mandates. Our millions are being spent for naught.

Now, just think of those small market stations like the one in

Quincy, Tom Oakley, that facing a 2002 deadline to complete their

DTV buildout. Think of how they are almost mortgaging their future to go digital. They deserve to have certainty that their signals

will at least reach their viewers.

Now, let me address an ongoing issue that our industry can and

is doing something about. I am chairing a special broadcast industry-wide committee, spending millions of dollars to conduct critical

tests to understand and to correct what many perceive to be the

disappointing performance of DTV transmission system. These nonpartisan scientific tests will determine whether the current 8-VSB

technology will work well enough or if improvements are needed.

They will also look at the viability of COFDM for the American

broadcasting.

Our goal is to expedite the transition, not to disrupt it or to

change the DTV table of allocations. We are simply committed to

getting these answers as soon as possible. We want to make sure

that the service that we provide the public is technically superior,

consumer friendly. We will have the answers to this test at the end

of the year.

One more word about going digital. Broadcasters are looking at

ways to provide enhanced services to benefit the public. When Congress approved going forward with DTV and in the 1996 Telecom

Act, it created strict rules for such activity. Any such service must

be secondary to our main job of providing free over-the-air television to consumers. Any revenues from such service must be

shared with Uncle Sam. Those remain the watchwords of our industry as we investigate new possibilities.

There are four things that I would like to you to take away

today, four important elements. These are the hurdles we must

overcome. First, the satisfaction with DTV transmission performance, broadcasters are tackling this problem in figuring out how to

solve it. The other three obstacles we can do nothing about: cable

interoperability, TV set performance and cable carriage. The FCC

and our industry partners must step up to the plate. My company,

our industry are betting millions of dollars and our future. We are

committed to this success. I urge Congress and our DTV players to

join us. Thank you.

Mr. TAUZIN. Thank you very much, Mr. Chapman.

Next will be Mr. Tim Fern, vice president of the Pace Micro

Technology. Tim Fern is the director of engineering for the company located in Boca Raton, Florida.

Mr. Fern.

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STATEMENT OF TIM FERN

Mr. FERN. Thank you, Mr. Chairman. Good morning. This morning I would like to say a few words about Pace Micro Technology

and our experience that enables us to speak here today. A little bit

about digital television in the U.K.

Mr. TAUZIN. I am sorry, our mike systems only work if you get

real close to them.

Mr. FERN. Our perspective on the performance issues recording

COFDM and multipath and the practical implications from a set

top box or manufacturer technology providers perspective.

Okay. So a little bit about Pace. Pace is the largest dedicated set

top box manufacturer in the world. We have supplied digital television boxes in the U.K. to the operator—On Digital—from the

start of their service in November, 1998. There has been very high

consumer and customer satisfaction with that product. On Digital

recently described our technology as exceeding requirements in all

respects and accepted without qualifications. I think it is important

to note here that that’s not the statement of the company that still

has concerns over the operation of the technology, and there have

been some concerns mentioned about things like impulse noise.

That statement describes that.

We are experienced in all platforms, satellite and cable and supply to the U.S. market. We currently have contracts to supply Time

Warner Cable, Comcast and BellSouth entertainment. So about

digital television in the U.K., it is a huge success. It uses a 2 K

version of COFDM. This is mandated by the DVB. It is now, as we

sit here today, in over 750,000 homes across the United Kingdom.

They are forecasting it will be in a million homes by Christmas. In

terms of penetration of TV households, that means to match that

success because your launch date was pretty similar, you should already have 5 million digital televisions installed in the United

States.

So now, the other thing about television in the U.K. Is that it is

not high definition, but there is a number of technological advances

going on in television that the committee should be aware of. The

difficulty you have when you see big screens is that you see a lot

of fuzziness and you see the line structure of the 5-2-5 line system.

Those problems can now be dealt with by electronics within the set

top box and within the display device. So we forecast that the viewers in Europe will be watching very high quality images, you can’t

use the expression ‘‘high definition,’’ but very high quality images

on big screens without the disadvantage of having to send so much

data. So they can just send maybe 3 or 4 megabits per second rather than the 19.6 megabits per second.

With our experience in the U.K., we believe that we could have

a COFDM-based product for the United States market in about 9

months time. And I think the transmissions could be on-the-air in

that time too.

The United Kingdom, I think, leads the world in digital television. We have over 20 percent of our TV households now connected to digital in some form. We have also got a very successful

digital satellite and digital cable operators there. So we are heading toward a very early switchoff of analog transmissions some

time in this decade, I should imagine.

80

In the process of inputting this technology into households, we

are also bringing the worldwide Web and e-mail into every home

in Britain. There will be seamless delivery with broadcast content

and Internet originated content arriving on the TV screen.

Okay. Pace perspective on the performance. We are very enthusiastic of all technology. I am not going to go into debate on the details, but we have been looking at the OET study. I think the difficulty with the OET study is it doesn’t apportion any weight to the

particular technical arguments. We think that the 8-VSB has problems of huge significance in operations of multipath, and this far

outweighs any of the problems that are listed in that report. Don’t

accept anecdotal evidence on the reception performance of this. Scientific study will reveal the COFDM is dramatically superior.

So if you stick with 8-VSB, I think you will become an island of

VSB. I think we have heard that expression before. The rest of the

world is clearly moving toward COFDM and America is clinging on

to a sadly flawed standard.

Sorry. Just allow me to conclude just a few seconds. So we know

that COFDM works and there is very high consumer satisfaction.

CSB problems will not easily be solved. These have been worked

on for many years. There is an opportunity in the U.S. to change.

This is a one-time opportunity. This is a very long-term decision

you are taking here. This technology will be with you maybe 50

years. If it continues and the problems cannot be solved, I think

the political damage is quite clear. Thank you, Mr. Chairman.

Mr. TAUZIN. Thank you, Mr. Fern.

Finally, Mr. Terence Rainey, president of the Association of Imaging and Sound Technology here in Vienna, Virginia.

Mr. Rainey.

STATEMENT OF TERENCE J. RAINEY

Mr. RAINEY. Mr. Chairman, distinguished members of the subcommittee, thank you for the opportunity to contribute to today’s

discussion. I am the President of ITS, the Association of Imaging

Technology and Sound. We are the trade association of the professional community of businesses providing post production services

and pictures and sound to the television and film industry. Our

companies take over after the director yells cut. We transfer film

to videotape for television viewing, edit the picture and sound of

TV sound and commercials and create visual effects for visual and

television.

Companies in the post production industry are small businesses

ranging in size from just a few employees to over 400. Companies

typically are privately held small businesses with the annual revenues in the area of $2- to $10 million. The full service and special

facilities total about 38,000 employees in the U.S. with a payroll of

about $2.5 billion. We create high paying, skilled jobs commanding

high levels of compensation. These companies comprise an industry

of about $5 million in annual domestic revenue.

The FCC, in approving 36 different picture formats for digital

television versus the 1 picture format for the legacy NTSC format,

has created significant complications for the post-production industry. The major television networks have chosen three different

standards. The post-production industry must now be able to work

81

at all the different standards. All but two of the digital picture formats, the two standards definition formats require that a post-production facility replace its existing equipment with equipment capable of producing high definition.

The broadcasters expressed desire for additional spectrum was to

allow them to serve the public interest in broadcasting high definition television. And for the last television season, CBS was the only

network to broadcast a high definition prime time television schedule. The CBS prime time high definition programming was partially underwritten by Mitsubishi for that season. The other networks are select high definition programming. For example, ABC

Monday night football, which was partially underwritten by

Panasonic, and the Jay Leno Show on NBC.

For the coming television season, the only major broadcaster that

has expressed any intent to broadcast prime time high definition

programming is CBS. However, even as recently as last week, CBS

appears to be unwilling to pay increased licensing fees to non CBSowned production companies for delivery of high definition programming. As a result, members of the post-production industry

are reporting to me that production companies are canceling their

orders for producing their television shows intended to be broadcast

in high definition for the coming television season. This is a step

in the wrong direction. The post-production industry is faced with

making an additional significant capital investment in high definition equipment.

Most of the incremental cost in producing high definition programming is incurred in the post-production process. Our members

are making this investment based upon the mandated schedule for

transition to digital television and the broadcaster’s expressed intent to broadcast high definition programming. Many post-production companies will not survive or will suffer severe financial hardship if their substantial investments in digital post-production

equipment were to lay fallow while new high definition programming becomes available to the American people.

You have heard some concerns regarding the approved digital

television transmission standards today. We are urging to you step

back from this issue and review the state of affairs as they exist.

Broadcasters have the ability today to broadcast high definition

programming to millions of Americans. The post industry stands

ready to support full programming schedules for high definition

content. But if there is no production of high definition television

programming to transmit over these systems, an entire industry

could be in peril.

America has historically benefited from a strong technical framework supporting its dominance in the creation of entertainment

content for the world. The lack of commitment to digital and high

definition programming is contributing to the financial decline of

the U.S. post-production industry that has been the foundation of

the television industry for many, many years. Thank you, Mr.

Chairman.

[The prepared statement of Terrence J. Rainey follows:]

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PREPARED STATEMENT OF TERRENCE J. RAINEY, PRESIDENT, ITS

Mr. Chairman, distinguished members of the panel, thank you for the opportunity

to contribute to today’s discussion. I am Terry Rainey, president of ITS.

ITS is the trade association of the professional community of businesses providing

creative and technical services in pictures and sound to the television and film industry. The postproduction processes are: 1. Video, Audio & Film Transformation;

2. Video, Audio & Film Manipulation; 3. Video, Audio & Film Finishing and Preparation of Video, Audio & Film for a Distribution System; and 4. Postproduction

Video, Audio & Film Creation

Companies in the Production and Post Production Industry range in size from just

a few employees to over 400. Companies typically are privately held small businesses with annual revenues of $2 to $10 million. The full-service and specialty facilities total about 38,000 employees with a payroll (including benefits & taxes) of

about $2.4 billion dollars. The postproduction industry creates high paying, skilled

jobs commanding high levels of compensation. These companies comprise an industry of about $5 billion dollars in annual domestic revenue.

The FCC in approving 36 different picture formats for digital television versus the

1 picture format for the legacy NTSC format has created significant complications

for the post production industry. The major television networks have chosen three

different standards. The post production industry must now be able to work at all

the different standards.

All but 2 of the digital picture formats (the two standard definition picture formats) require that a post production facility replace its existing equipment with

equipment capable of producing high definition.

The Broadcaster’s expressed desire for additional spectrum was to allow them to

serve the public interest in broadcasting high definition television.

For the 1999/2000 television season, CBS was the only network to broadcast a

high definition prime time television schedule. The CBS primetime high definition

programming was underwritten by Mitsubishi for the season. The other networks

had select high definition programming, for example ABC Monday night football

was underwritten by Panasonic.

For the 2000/2001 television season, the only major broadcaster that has expressed any intent to broadcast high definition programming is CBS. However, even

as recently as last week, CBS appears to be unwilling to pay increased licensing fees

to non CBS owned production companies for delivery of high definition programming. As a result, members of the post production industry are reporting to me that

production companies are canceling their orders for producing their television shows

intended to be broadcast in high definition for the 2000/2001 television season.

The postproduction industry is faced with making an additional significant capital

investment in high definition equipment. Most of the incremental cost in producing

high definition programming is incurred in the postproduction process. Our members are making this investment based upon the FCC mandated schedule for transition to digital television and the broadcaster’s expressed intent to broadcast high

definition programming. Many post production companies will not survive or would

suffer severe financial hardship if their substantial investments in digital post production equipment were to lay fallow while no new high definition programming becomes available to the American people.

There are concerns regarding the approved digital television transmission standards that broadcasters were intricately involved in developing. We urge you to step

back from this issue and review the state of affairs as they exist today. Broadcasters

have the ability today to broadcast high definition programming to millions of Americans. The post industry stands ready to support full programming schedules of high

definition content. If there is no production of high definition television programming to transmit over these systems an entire industry could be in peril.

America has historically benefited from a strong technological framework supporting its dominance in the creation of entertainment content for the world. The

lack of commitment to digital and high definition programming is contributing to

the financial decline of the U.S. post production industry that has been the foundation of the television industry for many, many years.

The postproduction industry is retooling its technical infrastructure to accommodate transmission of digital television per the FCC mandated implementation. Most,

if not all, of the analog equipment that has been in use will have to be phased out,

and new digital equipment phased in, in less than 5 years. Our members’ facilities

must support all of the formats to perform their services. The digital equipment to

retool our facilities is significantly more expensive than the previous generation of

postproduction equipment, with the capital investment for the typical small facility

estimated to be in the millions of dollars. To maintain the technological lead and

83

be competitive, U.S. companies will spend millions of dollars upgrading equipment.

With the state of digital and HDTV demand, postproduction companies are not

guaranteed a return on their investment.

The industry has continually invested in technology and process and as a result

has greatly enhanced the quality of television programming for all Americans.

Throughout this process, the postproduction industry has invested hundreds of millions of dollars in building the technical infrastructure that is necessary to support

the creation of television programming for the United States legacy NTSC format.

The NTSC format stipulates one display format utilizing an interlaced picture with

525 lines of resolution (525i). The NTSC’s 525i format is not listed in the new digital

ATSC standard (ATSC Doc. A/53 table 3).

The FCC’s digital television standard specifies the approved transmission formats

and does not mandate the production formats to be used by the postproduction industry. However due to the encoding parameters required for sound and visual images under the FCC’s digital television standard, the postproduction industry’s current technical infrastructures (built to support the NTSC standard) can only

produce standard definition pictures that can satisfy two of the 36 digital formats

approved by the FCC. This means that as a result of the FCC mandate requiring

the transition to digital television, the postproduction industry will have to completely replace its existing technical infrastructure to support the new digital television standards.

It should be noted that a network’s adoption of a transmission format should not

imply that they have changed their delivery requirements for their current television production to comply with their approved formats. The current network

standards vary from an interlaced high definition image (CBS and NBC) to Fox’s

adoption of a digital standard definition image. The complexities created for the

postproduction process in having to support all of these standards has exponentially

increased the cost and complexity of their transition to digital television. Unlike individual broadcasters or networks, the post production industry can not choose one

preferred format, but must stand ready to serve the program creation industry with

a full range of digital choices. Because of this uncertainty and diversity of choice,

the post production industry must bear the burden of significant costs in this transition, even though the market for these services has yet to fully develop.

The road to digital broadcasting was paved with broadcasters’ insistence that they

needed additional spectrum for High Definition broadcasting. The broadcaster’s expressed desire and intent to broadcast high definition programming created the environment for the FCC to be the ‘‘early adopters’’ in high definition television broadcasting and the motivation to change what was an otherwise proven and working

model for standard definition programming. Broadcasters are trying to balance their

desire to protect their spectrum with the expressed intent to provide high definition

programming with the business reality that the advertising revenues associated

with high definition programming are effectively the same as for standard definition

programming. Given this business dilemma, there is no business motivation for the

broadcasters to require high definition television programming which only increases

their postproduction costs and provides them with no immediate incremental revenue.

In order to justify the significant capital outlay required to build a digital infrastructure, the postproduction industry anticipated providing additional value by producing high definition entertainment programming for which they would be able to

charge incremental fees over the existing rates for their standard definition services.

The incremental value that was to have supported the postproduction industry’s

capital investment in high definition digital television infrastructure is greatly diluted to the extent that a broadcaster only anticipates broadcasting a digital standard definition picture.

Based upon current indications from the networks, absent any competitive pressure from cable and satellite companies, the broadcasters appear to have little motivation or intent to pursue high definition programming. Notwithstanding the uncertainty regarding the broadcasters intentions, the postproduction industry has to invest hundreds of millions of dollars in rebuilding its technical infrastructure to support the government’s digital television system.

The postproduction industry continues to support the transition to digital television. As an industry that has consistently embarked on independent research and

development to improve the technical quality of television programming, the FCC’s

transition to high definition television was anxiously awaited.

We believe that we can play a fundamental role in facilitating the transition and

creating the value statement that will motivate both producers and consumers of

television programming to ultimately adopt a digital high definition standard. However, we are an industry made up of predominately privately owned small busiVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00087 Fmt 6633 Sfmt 6621 E:\HEARINGS\65906 pfrm04 PsN: 65906
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nesses with limited financial resources. Unfortunately, the postproduction industry

does not enjoy the financial benefits of the free spectrum that the FCC was in a

position to bestow on the nation’s broadcasters.

ITS conducted an online survey on expected costs of DTV implementation. Following are the compiled results of the DTV Survey.

Anticipated DTV Expenses

In the next 12 months: $1,073,971

In the next 36 months: $3,192,188

Replacement Equipment overall: $2,006,579

In the next 12 months: $615,321

In the next 36 months: $1,961,429

Expansion Equipment overall: $1,344,737

In the next 12 months: $765,917

In the next 36 months: $2,243,333

Anticipated gross revenues from digital post services overall: $5,542,857

In the next 12 months: $2,825,000

In the next 36 months: $8,064,583

These figures are imposing to an industry whose members face enormous capital

investment expenses. Remember that the average revenue of an ITS member is

about $7 million per year.

By no means are we assured as in the feature film ‘‘Field of Dreams’’, that if we

‘‘build it, they will come’’. We are hopeful that with these incentives our industry

will be able to create cost-effective solutions to the complex challenge of implementing the most sweeping change to television in our history. We are poised to

usher in the digital information age, but we cannot do it alone. It is up to all of

us—broadcasters, and manufacturers, to build it, so they will come, and be thrilled

by the new television.

Mr. TAUZIN. Thank you very much. The Chair recognizes himself

and the members in order. First of all, I would hoped that we

would not have an engineering dual this morning and I think we

had one as we looked at 8-VSB and COFDM demonstrations. But

I heard some things and I want to make sure I heard them right.

Did I hear correctly, Mr. Hatfield, that the demonstrations were

correct in indicating that the 8-VSB standard does have problems

when it comes to multipath issues? But your argument is that they

can be cured; is that correct?

Mr. HATFIELD. Are you talking about the demonstrations here?

Mr. TAUZIN. Yes.

Mr. HATFIELD. I think we all must be careful about demonstrations that are of one-up anecdotal sort of things, because there are

lots of tradeoffs.

Mr. TAUZIN. Without getting into all that, are there multipath

problems with the 8-VSB technology?

Mr. HATFIELD. For in-building reception, there has been some

concerns raised.

Mr. TAUZIN. Like, for example, in New York, as Mr. Miller said.

Those are real problems.

Mr. HATFIELD. What I have got to say though is that there are

tradeoffs here. That, for example, if I recall some of the original

tests here in Washington, some of the problems in some locations

were caused by multipath, some of the reception problems were

caused by lack of adequate signal. The one system has some alleged benefits in multipath, the other has some alleged benefits in

terms of weak signals. So you choose one——

Mr. TAUZIN. You get a tradeoff. Second, is there a problem with

the mobile reception with 8-VSB?

Mr. HATFIELD. Mobile reception goes back to the original—forgive me for being an engineer.

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Mr. TAUZIN. Try to be a layman here. What I am trying to do

is try to understand from a standpoint of a consumer who is going

to enter this world, buy a set, buy a mobile set or set in his home.

Are there problems with mobile reception if I wanted to receive

data and television signals in a mobile environment?

Mr. HATFIELD. But let me say, when you ask an architect to design an office building versus a parking garage, you get different

things.

Mr. TAUZIN. I understand that. Can you just answer the question?

Mr. HATFIELD. The original commission proceeding never focused

on mobile reception.

Mr. TAUZIN. You were never asked to do that. Mr. Hatfield, I am

not being critical of the Commission, please. I know there are other

days I do that ad nauseam. You know that. What I am trying to

do is just understand it from a layman’s point of view. Does the 8-

VSB standard pose problems with mobile reception or not?

Would someone else try?

Mr. HATFIELD. Well, what I am saying is my overall feelings as

an engineer that the COFDM system probably has some advantages in a mobile environment.

Mr. TAUZIN. But can 8-VSB be brought up to the same capabilities? Mr. Miller, you want to try?

Mr. MATT MILLER. I will try to answer and attempt at plain

English. Neither of these television systems was fundamentally designed to accommodate mobile transmission. When you talk about

mobile reception, there is a real discussion about what do you

mean by ‘‘mobile.’’ So that aside, the capabilities of both systems

are, in the end, comparable for the providing mobile reception. The

COFDM system has moved a little bit further down that path because they have done the work. But there is no fundamental difference in the laws of physics underlying the two transmissions.

Mr. TAUZIN. Physically, the 8-VSB standard could be improved to

the point where it could be as fully capable as COFDM?

Mr. MATT MILLER. Yes.

Mr. TAUZIN. Mr. Hyman raised another issue that nobody talked

about. That was the translator issue. Many homes in America who

receive their television through a cable system who has had a supply through a transmitter or receive it directly. Mr. Hyman has

said there are going to be some problems here. Are there?

Mr. LEWIS. No.

Mr. TAUZIN. Answer first, then I will give you a chance.

Mr. LEWIS. I would refer you to the ATTC submission to the biannual review again where they documented on channel repeaters

for 8-VSB being used in Utah. There is a public broadcasting coop there that has a need for this type of activity. So I would like

to just say that it is a demonstrated proven fact that you can use

on channel repeaters.

Mr. TAUZIN. So you are saying it will work. Mr. Hyman says it

won’t. Why won’t it work, Mr. Hyman?

Mr. HYMAN. Well, I am not an engineer, so I can’t get into the

all the engineering specifics, but we know that on channel repeaters with 8-VSB can be used in extremely isolated instances where

the actual receiver and the transmitter are separated, so there isn’t

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the back channel, the backflow, if you will, of the signal which creates the same multipath environment that kills 8-VSB today.

Mr. TAUZIN. We are not going to get an engineering answer. Let

me do this. Let me ask you this: Obviously, there are an awful lot

of Americans who rely upon translators and repeaters in this country, particularly out west. I understand that huge percentages, for

example, 35 percent in Texas, much higher percentages as you go

out west. We need some clarity on that point. If you can submit for

the record.

My time has expired and I am not going to be able to get into

what I really want to get into next, which is this blame game going

on with people saying there is not enough programming for you

guys who build sets and build the equipment and you guys on the

broadcast side saying we aren’t going to produce any more programming that we are producing until you guys make sure it gets

to the consumer through the cable systems and through adequate

delivery systems.

So we have a little blame game going on. And we have got a situation where if the numbers are right, Mr. Fern’s numbers are

right, Mr. Hyman’s numbers are right, we are 4.75 million consumers short of where we ought to be in terms of moving this process along. If that is true, then what I will want you to do is help

us understand why we are behind and what we can do to speed the

process up. But my time has expired, the Chair will yield to the

gentleman from Ohio, Mr. Sawyer.

Mr. SAWYER. Thank you, Mr. Chairman. Mr. Campbell, let me

recall an offer that you made. In a couple of weeks there are about

15,000 people coming to southern California from all over the

United States. Could we have your address and phone number so

we can stop by? You prefer not to do that?

Mr. CAMPBELL. I defer, please.

Mr. SAWYER. I just thought it was an opportunity that you

couldn’t pass up. Let me get—I do want to ask you, Mr. Campbell

and Mr. Lewis and Mr. Miller, you seem to have some visible discomfort at one point during Mr. Fern’s testimony. Could I ask you

to comment on what he was saying?

Mr. CAMPBELL. I am sorry, whose testimony sir?

Mr. SAWYER. Mr. Fern from Pace. I think it was regarding comparative lines of quality.

Mr. CAMPBELL. This is the first time I have testified and this is

very unique, because I am hearing certain things and to be very—

it wasn’t discomfort, it was listening to a situation, we are not talking about HD pictures. I deal with the consumer. I know they get

excited when they see a three-dimensional picture. Another thing,

in cars they aren’t watching a 16-by-9 high resolution picture. If

anything, it was listening to what he was saying and I hear him

and apply what we are doing in this country.

Mr. SAWYER. All three of you seemed to have a comparable reaction.

Mr. MATT MILLER. One level of discomfort is I would really like

to sell him some COFDM chips so I want to be sure he is successful

in the U.K., but the second issue—my expertise really is in the

transmission area but I have been involved in cable broadcasting

satellite. I was right at the birth of digital satellite and digital

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cable. The model for the U.K. is so vastly different from what it is

here. I find it very difficult to wrestle with the comparisons that

are being made. It is a pay TV environment. The boxes are essentially being given away as part of the service. It is more analogous

to the U.S. satellite environment where, in fact, digital has been

hugely successful, picked a perfectly good transmission standard,

gave customers something they couldn’t get any other way, and

they lined up to buy it.

So saying that the differences in success of digital television over

the air in the U.K. Versus what is happening here is a result of

some alleged technical transmission issue is simply not relevant to

the discussion. That is the cause of my discomfort.

Mr. SAWYER. That clarifies. That fits in.

Mr. Fern.

Mr. FERN. Thank you for the opportunity to reply. Yes, I am well

aware the model is significantly different in the U.K., but I think

the goal here is to switch off analog transmissions at the earlier

possible date.

On the COFDM issue, we would maintain there is a very significant difference between the performance in a multipath environment. I would just like to give you one short statement here. It can

even be affected, ATSC, VSB can be affected by people walking

around the room. At the moment, you have to tell your children to

be quiet when you are watching TV, now you have tell them to be

still in order that you can watch it.

Mr. MATT MILLER. That is just factually untrue. You saw the

demonstration here. We have done billions of demos. We have had

marching armies at NAB and CES. Ask the sales guy. It is just factually wrong. And that is a source of discomfort.

Mr. TAUZIN. You stirred up a nest now.

Mr. SAWYER. Some of the witnesses have commented on comparative systems in Argentina and in Europe. Some use 8-VSB and

the others COFDM. Do any of those countries carry both?

Mr. LEWIS. No, because to have a multitude of standards is to

have no standard. The consumers need the security and the comfort of a known standard that people are designing to. I can’t afford

to design television sets to COFDM.

Mr. SAWYER. I understand your point. Mr. Hyman is disagreeing.

Let me also ask you to comment on your disagreement with Mr.

Hatfield on the question of mobility before I run out of time.

Mr. HYMAN. First, I appreciate Mr. Lewis, whose company Zenith

holds the pattern on 8-VSB, would like to have exclusive reliance

on it as would Mr. Miller, whose company NxtWave is a——

Mr. SAWYER. That is fine. Okay.

Mr. HYMAN. So I can appreciate why they want to have exclusive

reliance. We have suggested and asked for a second standard that

would be agnostic to the consumer, just like we have 18 different

scanning formats within digital television today. We want to stimulate this rollout as quickly as possible. And Mr. Fern’s points are

well made, that they are doing it abroad in other countries. And

I think it is imperative we not dictate specifically how consumers

watch it as long as they get it and they watch it. We see a success

story that we are not doing so well in this country.

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As far as the mobility issue, I have got a simple analog TV today;

you can call this portable, you can call this pedestrian. If my children get in the back of the minivan and drive around with this,

this is mobile. I can watch it today. I can watch it in this room.

I don’t have the problems, the significant problems that they have.

I would love to see them take their antenna out of the windowsill

and place it on the witness table as we did. In my house, my wife

tells me where the TV goes. If I told her it has to go there, that

spot, because we have to run a cable to that window or hang something outside the window, it is not going to happen. She wants to

put the TV wherever she does. We saw an antenna that we can put

anywhere in this room and it works. I would like to see the same

thing done and then see if we get the same type of reception.

Mr. TAUZIN. The gentleman’s time has expired. If anyone wants

to respond quickly, please. I have to get as many members——

Mr. SHAPIRO. A multiple standard would not only create chaos

but would so fragment the market that no serious manufacturer

can invest and produce multiple standard receivers in such a market. That is by a Nat Ostroff of Sinclair, by the way, who said that.

I would also point out that Sinclair has a very clear interest in

analog and delaying. They are a significant owner 32 percent of a

company, publicly traded company called Acrodyne. Recent press

releases as the debate rages on the industry is beginning to experience resurgence in the purchase of analog equipment. The delay to

the conversion from analog to digital has given us the opportunity

to reposition the company from a niche to mainstream supplier of

transition equipment. This is a company bent on delay of——

Mr. SAWYER. Thank you for your latitude.

Mr. TAUZIN. The Chair recognizes the gentleman from Illinois,

Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman. I hope not to get too

controversial either. This question is for Mr. Hatfield and Mr.

Lewis and Mr. Hyman. Which standard is better for reaching rural

areas? I represent rural Illinois, 19 counties stretching 300 miles.

Obviously I have been involved in this local broadcast debate for

a long time. And my major concern is my local broadcasters being

allowed to give the clear signal for public safety and all those other

things that they do so well. So we will start with Mr. Hatfield.

Mr. HATFIELD. Thank you. In fact, I would also like at the same

time to respond to Mr. Fern’s comment that OET did overweighted

multipath. And of course, what we were concerned about was the

exactly what you said, there is a tradeoff here. There is a tradeoff

here. And the 8-VSB modulation is generally regarded as providing

additional coverage. So you trade perhaps better in building coverage or multipath performance, but you lose the coverage at the

outside areas. That is what we were concerned about in our report

and talked about in our report.

Mr. SHIMKUS. Mr. Lewis.

Mr. HYMAN. One of the beauties of a COFDM-based system is

the issue regarding single frequency networks, the issue we talked

about with translators. Think of it as kind of a cellular phone system we have today with a lot of towers. There are 84 translators

that serve the State of Illinois, 1.45 million people live in areas

that are served by translators. 8-VSB cannot work in that system,

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and therefore some number of those people, 1 out of 3 homes in Illinois, is potentially affected by the lack of service provided by 8-

VSB in the translator scenario.

So COFDM clearly provides an opportunity for us to not only

reach what we refer to as the core business areas, the urban and

suburban areas where harshest, but also in the rural areas where

we can reach out and touch our viewers using a variety of systems,

such as translators and on channel repeaters that 8-VSB can not

do.

Mr. SHIMKUS. Let me go back. Mr. Hatfield, in your statement

and in a previous response you talked about I think—someone

mentioned weak signal. That was what you were referring to?

Mr. HATFIELD. Yes, that is exactly right.

Mr. SHIMKUS. So Mr. Lewis, can you talk about the implication

of a possible weak signal with COFDM?

Mr. LEWIS. Yes. Being somewhat familiar with Illinois, I am

aware of your situation. I am assuming that when you are talking

about coverage, that you want to have local content and not national content or State content throughout.

Mr. SHIMKUS. I want the consumers to have a choice, but I want

to make sure that the local broadcast signal for all the public service things that they do is received.

Mr. LEWIS. I was just trying to point out with the single frequency network you need to have consistent programming. So you

can rule that out as an option of COFDM. And then second, again,

translators are quite possible. They are being used. But the main

issue here is that with coverage, VSB has superior coverage. It has

a 5 DB signal-to-noise ratio advantage over COFDM. And that was

picked in order to allow us to have the greatest coverage from a

single antenna, and therefore would be better served in your great

State of Illinois.

Mr. SHIMKUS. I want to move on. Thank you very much. To Mr.

Hyman, Mr. Shapiro states in his testimony that some broadcasters want to lease out their public spectrum loaned to them by

Congress for wireless data applications. Does Sinclair have any intention of providing ancillary services in the future?

Mr. HYMAN. Congressman, I know there has been a lot of interest in this as of late. I can tell you right up front, Sinclair has not

sold, leased, given away or otherwise promised a single bit of our

digital spectrum to anyone other than the viewers of our markets

to deliver digital television. Having said that, I would be ashamed

and embarrassed as a businessman if I didn’t examine all the potential possibilities and how I could better serve my markets. I

have got community ID and public service commitments, and I

have a lot of close ties to the communities in which I serve. If I

can deliver services in the future that better serve my communities, then it is something that I certainly need to consider as a

businessman.

Mr. SHIMKUS. Thank you. Mr. Shapiro, I have a copy of the

March DTV guide here which—March 2000, which one of the

quotes by Glen Rogers talks about—and we have heard this testimony also today—my digital TV business now is very strong.

HDTV is leading the increases I have had this year in my projection TV business. In fact, I can’t get enough. I am oversold. This

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is the first time in a long time I have had so many deposits for

products that I can’t deliver. It is a nice article.

My question is to Mr. Shapiro, is the electronics industry ready

to supply the country with DTV products in time for the 2006 transition? And then obviously, from rural America’s perspective, will

the poor in rural areas be left behind?

Mr. SHAPIRO. The answer to the first question is yes, we are supplying the products and we are ready for 2006. From the very beginning of this debate years back, we agreed with members of the

subcommittee who said it is an unrealistic deadline. We projected

30 percent penetration then. In terms of the poor, absolutely not.

I think the fact is the prices in the consumer electronics industry

continue to come down radically every year as they are with digital

television. And the way to keep them up is to have the uncertainty.

We are put in a box right now. What you have heard today on this

panel from broadcasters is you are not supplying enough sets out

there to get a signal. But we want to change the signal, so the sets

you sell will be outdated.

So we can’t have it both ways. We are prepared and consumers

will buy sets that receive signals, provided there is no uncertainty

about the standard. In the interim however, there is a tremendous

consumer thirst and desire to buy HDTV from a variety of sources.

If the broadcasters continue to delay, they will get left behind to

alternative media. And that is the situation we are in now. Manufacturers are going full bore, prices will continue to come down,

and that is the way that all Americans will be able to receive digital television. But not necessarily from broadcast.

Mr. SHIMKUS. Thank you, Mr. Chairman.

Mr. TAUZIN. The Chair raises the gentleman from New York, Mr.

Fossella.

Mr. FOSSELLA. Thank you, Mr. Chairman. I have a question for

Mr. Hyman. It can be followed up with Mr. Hatfield and Mr. Miller. It has been alleged, Mr. Hyman, that rollout of the COFDM in

the New York market would interfere with analog signals and experience serious interference with some signals and would not be

as effective as the other digital signal with the large position of

New York. Are you aware of these allegations?

Mr. HYMAN. I am, Congressman. Would you like me to address

those?

Mr. FOSSELLA. Sure.

Mr. HYMAN. Sinclair’s petition we submitted last year stipulated

that if COFDM were adopted, that broadcasters would not be permitted to create any more interference when operating with

COFDM, that they would be permitted today using 8-VSB. And

there are a number of ways that that can be achieved through

beam tilting, directional antennas and so forth. What I find fascinating of the study that Zenith had accomplished was they used

laboratory data from the Brazil tests and applied it to two stations

that are not on the air in New York in order to come up with in

scenario of increased interference, whereas there is real world data

from Brazil tests they could have used, and there are stations actually on the air. There are three stations right now in Washington

that are configured to operate with COFDM under temporary auVerDate 11-MAY-2000 08:39 Jan 05, 2001 Jkt 067698 PO 00000 Frm 00094 Fmt 6633 Sfmt 6602 E:\HEARINGS\65906 pfrm04 PsN: 65906
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thority: WRC, WUSA, WETA as well as WBFF in Baltimore and

elsewhere.

So far despite all these myths of increased interference, we have

yet to see any evidence of any increased interference. As a broadcaster, I don’t want any more interference. That damages my business. So I would adopt any technological means necessary if that

were the case.

In closing, the FCC’s own report they issued last September stated that an adoption of COFDM would create less than 1 percent

of additional interference to today’s NTSC channels. Those aren’t

my words, those are the FCC’s.

Mr. FOSSELLA. So you are saying it has alleged that millions will

all get proper signals and others who will receive analog won’t get

interference, if you had your way.

Mr. HYMAN. If the FCC adopted our petition or something like

that today, we stipulate that broadcasters cannot create any additional interference. So the answer is yes they would not be affected.

Mr. FOSSELLA. Mr. Hatfield.

Mr. HATFIELD. I have a different view of that. In—when you say

you would not cause any more additional interference, what that

means is that you may have to reduce the power levels, which

means the signal is weaker out at the coverage area. So the threat

of losing millions or a substantial number of people is very real.

Here it goes back to this tradeoff that I keep coming back to that,

you know, you can’t get something for nothing here. What you gain

on one side you lose on the other. If you gain on multipath, what

you are going to do is pull back on the coverage. That is what we

are concerned about.

In the chairman’s letter today, that is what he is talking about.

We are concerned that by introducing this new technology you

would lose coverage at the edge of the coverage area and also within some buildings and other hard to reach places as well.

Mr. FOSSELLA. So under the existing technology areas that are

currently covered would not be covered in your opinion if we shift

to the COFDM.

Mr. HATFIELD. That is the concern we have. The sort of technical

term that we use is replication of coverage. You would not be able

to replicate the current coverage that you get with NTSC because

to avoid the interference, you would have to reduce the power level.

Mr. FOSSELLA. Mr. Miller, you care to comment on this at all?

Mr. MATT MILLER. Sure. Again, trying not to get into dueling engineers here, but the laws of physics really do apply to all. I think

that is what Mr. Hatfield is referring to. Ultimately, the ability to

receive a signal is related only to the spectrum you allocate to it

and the amount of energy you put in the channel. The issues that

related to the 10-year transition in this country, which is really different from what it is in the rest of the world—we already have

a very, very large installed base of current analog TV transmissions that will have to remain on air and coexist with a large

population of digital transmissions. The standard that we have got

was selected principally by balancing the need to replicate coverage, which means you have got to get energy out at the edge of

the signal in the digital environment and not interfere with the existing analog transmissions.

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When you go on air with independent or isolated circumstances

where the power in the digital signal is ratcheted down to avoid

interference, first off, you are not dealing with a totally populated

environment; and second, you are not discussing adequately the

loss of reception at the edge of coverage. And this goes back to the

question from the Congressman from Illinois, and to some of the

issues that have been addressed by Mr. Hatfield. The objective here

was to guarantee that anybody currently getting a TV signal in the

analog world will be able to continue to get a TV signal in the digital world. We have gone through very, very thorough and scientific

analysis on this. And the bottom line is in order to accomplish the

robust reception that COFDM does, it steals energy and it reduces

coverage. You just can’t get around that. That is the way it is.

Mr. TAUZIN. The gentleman’s time has expired. The Chair raises

the gentleman from Mississippi, Mr. Pickering, for a round of questions.

Mr. PICKERING. Thank you, Mr. Chairman. Thank you for holding this hearing today. Let me ask Mr. Hyman a follow-up question

concerning the schedule 2006 incentives for you all to be able to

meet that. What do you see as the realistic timetable for broadcasters to make the 2006 schedule? Do you think that is a realistic

schedule first?

Mr. HYMAN. You mean the rollout of terms of will all broadcasters—will all consumers have 85 percent penetration with respect to the rollout of digital?

Mr. PICKERING. That is correct.

Mr. HYMAN. We certainly believe it is going to be some time after

2006. I think what we have heard today devices are certainly not

at affordable prices, even though some of my colleagues at the table

would suggest otherwise. I think a 1500, $2000 device is a pretty

expensive for the lunch pail carrying member of the public. I also

believe that the inability to provide ease of reception is going to

continue the snail’s pace of the rollout, again, with the 34,000 receivers. We are nowhere close to the kind of rollout that we envision. This is less than 1⁄30th of 1 percent of Americans, the American television households have these over-the-air receivers. We believe there needs to be a stimulation in the rollout of affordable

product that is work for ease of reception. That will go a long way

to this.

Broadcasters are building out, you heard comments from Mr.

Chapman as to how quickly that is occurring. But it is the consumer who ultimately is going to decide the success of this. He or

she is the one that is going to buy the product. And at the end of

the day, if they are not buying the product we are not going to be

successful.

Mr. PICKERING. What incentives or regulatory initiatives are reform could we take to get us there on time?

Mr. HYMAN. Well, certainly we believe if the manufacturers can

offer affordable products, and also a transmission system or digital

standard that works, I can appreciate that they want to sell larger

theater-sized devices with higher profit margins, but I think we

can get consumers into digital television much quicker if much

smaller products that are offered, they allow people to pick the

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kind of television that suits their viewing needs as well as their

family budgets.

Mr. PICKERING. If broadcasters are able to use some of the spectrum for ancillary or incidental services or other commercial diversification, would that speed or restrain the efforts to make the

transition?

Mr. HYMAN. It is really guesswork here. With some deference to

Mr. Miller from Viacel, certainly any way to roll out digital in any

form intuitively would make sense, but I think we are placing the

cart before the horse. My primary business is delivering free overthe-air television into the family room. I can’t do that reliably without placing an antenna outside a window and running it through

the room. I think we need to solve this dilemma first before we get

to the next step.

Mr. PICKERING. Mr. Lewis, Mr. Shapiro, how would you like to

respond, and what is your sense that we will see the manufacturing of the market develop in such a way that consumers will

buy the product and the transition from the manufacturing side?

Mr. SHAPIRO. I think as Members of Congress, you can make a

clear statement to the American public that you are going to stay

the course, that several years ago there was this battle. Broadcasters agreed upon a standard. Now, some broadcasters are questioning it. They don’t want to make the investment in digital or

they have a vested interest in keeping it analog. I think it is important to send out the message to broadcasters, they are going to be

held to the deal. The deal was free spectrum in return for broadcasting in digital to the standard. Let us stay with it.

The free marketplace, I think, has already proven that consumers want digital television. They are buying it. The products

sold out. The only challenge is in the broadcast end right now,

quite frankly. Until broadcasters are broadcasting something, they

are not talking about changing the standard, then consumers are

going to be questioning whether to invest in the broadcast portion

of the television set. But the product is already a marketplace success. We have to make it clear as a country that we are staying

the course and we are not tempted to follow the lead in Europe,

which is focused on a totally different world envisioning the mobile

applications and Internet and all the sorts of things that have

nothing to do with free over-the-air broadcasting into the American

home.

Mr. CAMPBELL. May I add something, please, sir. I would just

like to say, as a retailer, many of our customers are not looking to

have a bow tie hanging from their television set on top of their TV.

As far as the expense is concerned, I was just curious whether the

COFDM, whatever, is that going to lower the price instantly to 499

for a television. I just saw this board over here, for 299, you will

be able to receive HDTV on your computer system. If you look at

the DTV guide, there is a story in here by Best Buy that talks

about DTV, myself included. The sales are incredible. We just went

to a high of 63.9 percent of all of our big screen sales right now

are DTV or HDTV. It is not a flawed format as far as a retailer.

I am tired of hearing of the consumer being bombarded by Sinclair,

that they have a defective or format that doesn’t work. It does

work. Thank you.

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Mr. TAUZIN. The gentleman’s time has expired. The gentleman

from Florida.

Mr. STEARNS. Thank you, Mr. Chairman. And I ask unanimous

consent that my opening statement be made part of the record.

Let me ask Mr. Hatfield here. We have the Europeans using the

COFDM and the Americans the 8-VSB. And of course, we think it

came about because of the private enterprise and the government

dictated in Europe, and I guess Japan too. What do you see long

term having these two different systems? Do you see any problem?

Mr. HATFIELD. No I, think they are both—I think they are both

really fine systems. I should make that clear. But broadcasting is,

as we have heard testimony today, broadcasting is different in different parts of the world. We have a system here. Our history is

different. The way we organize broadcasting here is different with

wide coverage, high-powered stations and so forth. So I am very

comfortable with the fact that there may be one country may have

one system and another country may have another. Because it reflects the—it may well reflect their own history, their own requirements and so forth.

Mr. STEARNS. You know when Macintosh got started, Apple got

started, you had the PC and the Windows, they weren’t compatible.

Now they are almost compatible. Do you think somewhere down

the road we will have that same possibility that Sony or RCA will

be able to make the television so that they will be compatible with

both systems?

Mr. HATFIELD. You know, I think there is people here at the

table that could probably answer that question better than I can.

Not that I am trying to duck it. But we are in the business of seeing what, you know, software changes or whatever would be needed to be able to maintain compatibility or ship products into both

markets.

Mr. STEARNS. Mr. Lewis. You seem like you would be interested.

Mr. LEWIS. I think in the end the economics of the consumer

electronics industry will not allow that convergence that you are

talking about. To put the cost into the set of two different standards, and then sell it at retail here is not going to be a viable situation. And so the Mac and the PC share common software, and that

may be true with video being converted between the two formats

and being sent out, but I don’t see that you will have a PC with

a Mac inside of it, so to speak, or a Mac with a PC inside of it in

the future.

Mr. STEARNS. A lot of us are probably looking at digital television

on our computer screens. So when Dell sells a computer in the

United States or sells it in Europe, it is going to have to have

something different for COFDM or 8-VSB.

Mr. MATT MILLER. Since I am trying to talk to folks who want

to do video on PCs, I will address that one. Cost is really the

enemy even more than time. In the PC industry especially, they operate on razor-thin margins. Our customers would love to have us

do essentially a COFDM version of this board so that they can buy

from a common supplier. But the likelihood of their building a universal PC is very slim. So what they will do is they will stuff it

with one set of components for use in the U.S., and they will stuff

it with a different set of components for use in parts of the world

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that have different standards. The likelihood of having a device

which receives both transmissions simultaneously is very slim. You

don’t need it.

Mr. STEARNS. If you had two cards, wouldn’t that work if you

had——

Mr. MATT MILLER. Twice the cost. That is twice the cost. And

cost is really a religion in this environment. It is a religion in

everybody’s environment. So while it is technically conceivable that

you can make one chip that would decode both of these formats,

they don’t really have a lot in common. So the chip that we have

got here decodes both the U.S. cable and U.S. broadcast on a single

chip very efficiently. Because those 2 signals co-exist in one market. Right now we don’t have the VSP and the COFDM signals coexisting in one market so there is no market need. And technically

they really don’t have a lot of common. It is a lot of work to put

the two together.

Mr. STEARNS. This is dealing, Mr. Hyman, I guess, Mr. Chapman. You know we on this committee always talk about this, providing your HDTV signal. This has probably been asked before, but

how much of the 6 megahertz TV channel do you plan on utilizing

for ancillary services such as streamlining data? Maybe you can

quantify this if it has been talked in a general peripheral way;

maybe you can quantify it for us and tell us this is what it is going

to be. Is it possible? Mr. Hyman, you can start.

Mr. HYMAN. Thank you, Congressman. We have made no commitments and don’t have any plans to broadcast anything other

than digital television. Have we looked at it? Yes. Have we discussed it? Yes. But we have been so focused on trying to improve

the reception for this primary business that we are in, which has

been our core business for 50 years, that to be perfectly frank, we

haven’t been able to get past that to figure out what would happen

next. I would like to, and certainly as anyone who is challenged in

a business, would like to be able to do the best they can and improve the services, but it is too far down the road because we have

a more immediate——

Mr. STEARNS. As we come across to Mr. Chapman, Mr. Hatfield,

you can tell us what you think should be done. In other words, do

you think they should be able to use it and how much.

Mr. Chapman?

Mr. CHAPMAN. Let me share our vision, which is somewhat different than many others in this room today. First of all, with regard to spectrum aggregation, there are presently four companies

that are involved in this business. We have the local telephone

company, and of course, they want to be in this business. We have

the cable companies, and they want to be in this business. Cox has

high speed modems that deliver that today. We have AT&T, and

they want to be in that business. Quite frankly, I think anybody

that is going to think that they can set up a toll booth on the television digital signal is going to be very disappointed.

Quite frankly, I would expect in the years to come, and actually

many of those that deal with making predictions, indicate that the

cost of bit delivery will go down faster than the cost of long distance telephone. So our whole existence as a company has to do

with local service to our local communities. Half of the people that

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work for LIN television either work in the news department or the

technical department to support that. We see our role not changing. Our role is to really service local community.

How do we plan on doing that? Let me give you an example right

now. Tonight in New Haven, Connecticut, roughly oh, 1 in almost

2, we will have almost 20 percent of the audience at 6 watching

our television station. Our news, WTNH. We have an association

right now with Yale New Haven Hospital. And once a week they

provide medical reports, the breakthroughs in medicine, health

issues, but that, in television, can only be maybe 2 minutes. As you

know, a newscast is appointment viewing, 30 minutes in length, 7

minutes in commercial, 3 minutes in weather 3 minutes in sports

and 28 stories. This is television; this is what we do. Sight, sound,

motion. More Americans get their news from television than any

other source today. But we would not be able to provide all the

breakthroughs on medicine. So what we do today is we send people

from our television news to our Internet. In June, we had one 1.8

million visits. One of the highest in the country on that. Simply because we were providing the consumer with more than just television. We are giving them, in essence, the newspaper of tomorrow.

The data newspaper of tomorrow. I think that what we need to do,

and I think there is a Cajun phrase, lagniappe, which means more,

additional——

Mr. TAUZIN. It is pronounced ‘‘lagniappe.’’ You are going to have

to work on that.

Mr. CHAPMAN. That is what we plan on doing. I guess it means

a bonus, something additional. So tomorrow we hope to actually be

closer to our audience by the use of digital. As you know, predictions 3 years out suggest that people will be getting half of what

they get over the Internet today on maybe Palm 7s or telephones.

It doesn’t matter how it is received. Our interest is ensuring that

the American public receives the best and possible technology there

is today. We are agnostic when what system that comes to. The

American television system is the envy of the world today. Our interest is seeing that universal service, to the rich, to the poor, to

the rural, to the urban continues, and that we become a major part

of that in the future, just as we have today. We are here to suggest

that we need to preserve that system.

Mr. TAUZIN. The gentleman’s time has expired. The Chair would

ask a couple of questions before we finish and Mr. Stearns would

like a few words in closing. I will be glad to recognize him. First

of all, Ms. Lathen, where we are on cable must carry at the FCC

right now. Where are you?

Ms. LATHEN. We, as you know, we started a proceeding in July

1998. And——

Mr. TAUZIN. You started proceedings in July 1998.

Ms. LATHEN. That is correct.

Mr. TAUZIN. Where are you now?

Ms. LATHEN. In that proceeding, there were two issues we were

looking at, one of the cable carriage issue, which is the dual issue

of carriage, and the second issue was the compatibility issue. We

extracted the compatibility out from that proceeding and put it into

OET to take a look.

Mr. TAUZIN. When is that going to happen?

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Ms. LATHEN. That is going on right now.

Mr. TAUZIN. When does the carriage issue come to a head?

Ms. LATHEN. I don’t know when the Commission is going to

schedule the issue for completion. I think what the Commission

has done is they have tried to see what things were going to happen in the marketplace. For example, we have seen AT&T and

Charter as well as other MSOs enter into retransmission agreements with some of the major broadcast networks.

So I think that for now, we would continue with the compatibility

proceeding. We also have a November deadline for completing the

Satellite Home Viewer Improvement Act’s provisions that deal with

analog carriage. So I think we feel that at that time we will be able

to look at both digital and analog carriage from the satellite perspective and to harmonize those two proceedings.

Mr. TAUZIN. Second, is the Commission moving on any inter

operability standards?

Ms. LATHEN. I believe we are. We mandated that the manufacturers have to separate the security pod from the set top box and

the date for that was July 1. Cable labs have told us that, in fact,

they have separated the pod, and they met the July 1 date for the

digital box. We have had some concerns about the hybrid box. That

is the box that is both an analog and a digital box. And there were

some systems involving 10 MSOs that were not in compliance with

respect to the rules that pertain to that. They have asked for waivers and we are working on that.

Mr. TAUZIN. I don’t want to get into the policy questions. We

don’t have time today, but obviously Mr. Chapman makes a point

that until some of these policy questions are addressed, that they

have problems in producing the programming. Because they don’t

know whether to reach the ultimate consumer. So I will be submitting some questions in writing to you about those issues and how

the Commission views them, and whether or not you see that as

a problem with delaying the rollout or whether that is going to get

resolved in the marketplace. I also want a quick question to perhaps Mr. Hyman. And Mr. Chapman, you can answer this, I understand that current technology 1080i, the highest standard of HD

television, can be delivered with less than 6 megahertz spectrum;

is that correct?

Mr. HYMAN. I think the issue might be in something like 19.39

megabits.

Mr. TAUZIN. Let me ask you, do you need all 6 megahertz to deliver the highest quality HDTV standard today?

Mr. HYMAN. To be perfectly frank, I don’t know, we know the answer to that because no one has developed a system smaller than

6 megahertz. The way it is designed today is the 6 megahertz system is used entirely to carry the signal.

Mr. TAUZIN. Is it technologically feasible to deliver the HDTV

1080i highest standard, high definition signal with less than 6

megahertz? Mr. Chapman, you want to try?

Mr. HYMAN. Can I defer to our vice president of new technology

who was in that business for several years?

Mr. TAUZIN. Let me get Mr. Chapman’s answer.

Mr. CHAPMAN. Let me address it this way: This past April in Indianapolis in our television switch, CBS affiliate, we actually

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broadcast 63 basketball games for the NCAA. Some were two or

three at the same time. But not in the highest quality.

Mr. TAUZIN. I understand that. I am asking you in the highest

standard 1080i technology, what is the spectrum requirement? Can

you do it in less than 6 megahertz?

Mr. CHAPMAN. It depends on the programming. If we are going

to do Meet the Press or this hearing here today, you don’t need

that. But if you are going to do a basketball game——

Mr. TAUZIN. A lot of motion you need more output. But it is conceivable to do a lot of programming in HDTV for less than 6 megahertz using the highest standard 1080i, right?

Mr. CHAPMAN. Depending on the program, yes, sir.

Mr. TAUZIN. What would happen if you had this antenna off the

window sill and put it on the table? What would happen with the

reception?

Mr. HYMAN. It will go away.

Mr. CHAPMAN. My Hyman says it will go away. Is that correct?

Mr. LEWIS. I don’t know. We haven’t done it.

Mr. TAUZIN. Why didn’t you put it on the table as Mr. Hyman

did? I am trying to find out among you dueling engineers who is

more credible, and one, you put an antenna on the table and one

put it in the window, and the other one is telling me if you put it

on the table it won’t work.

Mr. MATT MILLER. First this issue of dangers of live production.

Okay. We are arguing about 20 feet. We have when we were in this

room looking at the signals earlier.

Mr. TAUZIN. Did you try it on the table?

Mr. MATT MILLER. Yes, it worked just fine.

Mr. TAUZIN. Why didn’t you—why did you put it in the window?

Mr. MATT MILLER. Risk reduction. I wanted to be absolutely sure

that it was going to work.

Mr. TAUZIN. Mr. Shapiro.

Mr. SHAPIRO. Only 5 percent of the consumers view using an indoor antenna for primary. It is a tradeoff.

Mr. TAUZIN. I understand the numbers. That is on the record already. I am just asking why when we had 2 engineering demonstrations. You choose a different place to put the antenna. And

why it went behind the curtain instead of in front where we could

all look at it.

Mr. Miller.

Mr. ROBERT MILLER. In New York a few weeks ago, there was

a demonstration of Mr. Miller’s board. There was 12 or 13 booths

in the Marriott Marquis in Times Square. And they had windows

on both sides, you could see in the midtown Manhattan from a

moderately high floor, 17th floor or something like that. We were

right in the center of New York City, and I asked Mr. Miller about

the reception of 8-VSB. He said he had solved the problem of reception on 8-VSB. I said well, that means that everyone here is receiving over-the-air reception and no one was receiving over-the-air reception in that facility and in most places in New York City.

I would like to also make a comment about the single frequency

network. You should understand that a single frequency network

with 8-VSB means that have you to keep the signal from seeing the

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broadcast signal that you are rebroadcasting, whereas with

COFDM you can have antennas anywhere you want.

Mr. TAUZIN. I understand. That is one of those tradeoffs. But the

question I asked you I want to go back to it is if you put that antenna on the table, that there was a higher risk, that you would

be receiving a picture; is that right?

Mr. MATT MILLER. Yes. For the record, there is a higher risk.

Mr. TAUZIN. So that your experiment could have failed if you had

to put the antenna on the table.

Mr. LEWIS. I would like to weigh in and say there are three

issues that tradeoff: coverage, interference and reception. On reception, we are not to the full extent of what we can achieve with

VSB.

Mr. TAUZIN. Let me try to wrap. I will ask Mr. Stearns if he has

any other comments at the end, too. We talked a lot about the deal,

the agreements we had on the spectrum and HDTV and the digital

transition. Let me give you my perspective on what is not in the

deal. What is definitely a deal breaker would be for broadcasters

to lease off or sell off that spectrum and profit from the sale of

lease of it. That is clearly not in the deal. Any broadcasters who

did that, I think, would run a risk of Congress revisiting the deal

and reclaiming spectrum.

The deal was that the 6 megahertz of digital spectrum was to be

used for digital transmission, including HDTV, and that the broadcasters could use it for ancillary services. If they got into any kind

of competition with anybody else, they’d have to pay for it. That

was the deal. It would be a clear deal breaker for anyone to think

they could profit by selling this spectrum off or leasing it off.

Second, what is not in the deal which would be a deal breaker

for broadcasters not to show the American public HDTV. Now, I

don’t know who is in the room representing any broadcaster who

thinks that they can provide digital television with that 6 megahertz without giving Americans a chance to look at HDTV. But my

understanding of the deal was that Americans were going to see it.

And the Americans were going to choose whether they wanted it

or not in the marketplace, but they were going to chance to see it.

I got a little sort of thing to tell you about. I have seen HDTV

a number of times. I saw it at the Super Bowl. I saw the HDTV

coverage of the Super Bowl in the ABC suite. One of the amazing

moments was when everyone who competes to get in those seats

in the front to see the live action left the seats in the live action

to gather around that liquid crystal screen and watch it on HDTV

inside the suite. What was more amazing was that John Travolta

was a guest in that suite and he was sitting out there by himself.

People left the chance to sit and visit with John Travolta to come

and watch that liquid crystal screen because it was a series of important plays that nobody wanted to miss this, that incredible, almost 3-D experience of HDTV.

Americans, I think, will want to see that. And I think our deal

was that they were going to see it. It would be a very big mistake

for broadcasters, networks or anyone else, cable companies, anybody else who kept it from reaching the American consumer. What

is also not in the deal in terms of this digital transition is any development of systems that don’t reach consumers. The consumers

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are left out somewhere in this country, whether they are in the

rural parts of America or this urban center of our country, whether

they live in mountains or high buildings, that they are entitled to

receive these signals from this 6 megahertz of spectrum that we allocated for digital transition. What I think is not in the deal, but

I will leave it to your discretion on this one, is that Americans

shouldn’t have to buy a set for the specific location of living in at

a specific time they are living there. That I hope we are going to

have a system that works. I can take my television with me when

I move, whether it is across town or across country.

I recognize Mr. Stearns that we are not going to take our television with us when we go to Europe, we are going have two different systems obviously. But we ought to be able to move around

this country and move around town and still get reception on the

same set with the same equipment. I would hope that is what is

in the deal is that whatever we do with standards, whether it is

in the post production problem area and I understand your concerns, Mr. Rainey, we talked about if privately, I think there are

real concerns about how much post production is going to cost

when we had too many different formats out there, or whether it

is in the question of what, how we transmit a signal and how we

receive it.

I would hope that part of the deal is that we get all these new

services out to as many people as possible so that prices can come

down and more people can afford them, and that free television remains a part of the equation, because that is why we gave 6 megahertz to the broadcasters in the first place was that free television

would remain part of the equation. And the final part of the deal

of the analog spectrum has to come back. I want to remind everybody of that. We set a date of 2006. It looks like we are not going

to make it at the current pace and that is sad.

What is also part of the deal is that we can extend that 2006,

but only because we have to.

And so my final question, and I am going to put to all of you and

ask you to respond in writing on is what can I do? What can Mr.

Stearns do? What can we do as Members of Congress to expedite

this process so we can get this new system in place as rapidly as

possible for as many Americans as possible at affordable rates as

possible without leaving anybody else and get it done in a way that

we don’t have to have any more battles, or whether the spectrum

was allocated correctly or wrongly, and we don’t have to have any

more battles over which standards work or don’t work.

I need all your help on that. What are the steps we have to take

between now and 2006 that we haven’t taken? Please come back

to me on that.

Mr. Stearns.

Mr. STEARNS. Mr. Chairman, I can give you an answer to that

question. I think most of them agree, if you give them tax depreciation acceleration or tax credits for the defendant. Of their high definition television as well as you give that to producers of HDTV, I

think the market would explode much like we do for some other

industries.

Mr. CHAPMAN. Where can I sign up?

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Mr. STEARNS. I think incentives are what we need here so we

get—American public has HDTV. I think the reason you are not

going ahead is because of huge capital expenses, is because you are

not sure the public is going to buy it and the TV is $10,000. So by

the tax code like we have done in other industries. But Mr. Fern,

as I understand it, Pace Micro Technology is a British broadcaster.

Is that what you do? I wasn’t sure what you did.

Mr. FERN. We are a manufacturer based in the U.K., but we now

have set up a facility in Boca Raton, Florida. We develop and manufacture equipment for television operators. So we are supplying

Time Warner Cable, Comcast, BellSouth entertainment.

Mr. STEARNS. I think you are the only one on the panel who is

probably understanding the British market. I thought you might

give an overview of what you saw here and of whether you could

give some insight that maybe perhaps we don’t have.

Mr. FERN. Thanks for the opportunity. I think just to—I certainly can talk a little bit about the way the British market is developing where the—obviously, I can’t speak for the government,

but what it appears that they are doing is managing the transition

to digital coordinating between satellite cable and the terrestrial

broadcasters to free up the spectrum as early as possible. So they

are providing—there is none—there aren’t obviously financial incentives, but they are trying to get——

Mr. STEARNS. There are not financial incentives.

Mr. FERN. There are not financial incentives, but what they are

doing is ensuring a very healthy competitive environment between

the operators.

Mr. STEARNS. What kind of incentives? I didn’t quite understand.

Mr. FERN. I don’t believe they are financial incentives, but they

regulate to ensure that there is a very healthy competition between

all operators.

Mr. STEARNS. It must be that the existing cable is so expensive,

and this new HDTV is coming down or something?

Mr. FERN. No, there isn’t high definition in the U.K. We have

the—the picture quality is very good and U.K. Consumers don’t

have such a large living room, so there is not such big television

sets.

Mr. STEARNS. If every British citizen has a choice between HD

television, would they care?

Mr. FERN. I think technological advancements give the better

picture quality, because you can put some electronics in what you

are seeing in the display which gives you much better display.

Mr. STEARNS. Thank you, Mr. Chairman.

Mr. TAUZIN. Thank you. Let me thank you again. You have come

from all across America. I hope the audience has recognized that.

You have come there around this country to enlighten us today. I

hope we are a little more enlightened. I am frankly a little more

confused in one area. I apologize for that. You have been very helpful in regard for enlightenment. The record will stay open for 30

days. If you would like to volunteer to submit any other statements, you may not have been able to answer a question, you want

to answer it more fully, you have 30 days to do so. My great thanks

to you. The hearing stands adjourned.

[Whereupon, at 12:50 p.m., the subcommittee was adjourned.]

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[Additional material submitted for the record follows:]

SUPPLEMENTAL TESTIMONY OF SINCLAIR BROADCAST GROUP, INC.

Sinclair Broadcast Group, Inc. (‘‘Sinclair’’) hereby supplements its testimony for

the July 25, 2000 hearing of the Subcommittee on Telecommunications, Trade, and

Consumer Protection regarding the current status of the transition to digital television (‘‘DTV’’). In his closing remarks at this hearing (the ‘‘DTV Hearing’’), Subcommittee Chairman W.J. ‘‘Billy’’ Tauzin asked the hearing witnesses to supplement

the written record with information relating to a number of different issues facing

the DTV transition. Accordingly, Sinclair now offers its views to the Subcommittee

on a number of these matters, with a focus on what it believes is the fundamental

issue now facing the broadcast industry and the U.S. viewing public: The ATSC 8-

VSB reception problem, and broadcasters’ urgent need for the flexibility to operate

using a second DTV transmission standard, DVB-T, that has been quality-proven

and widely adopted around the world.

I. CONGRESSIONAL ACTION NEEDED TO ACCELERATE THE DTV TRANSITION

Most fundamentally, Chairman Tauzin asked the witnesses at the DTV Hearing

what Congress can do to facilitate the transition from analog to digital television

broadcasting in the United States. As Sinclair urged in its original testimony to the

Subcommittee, Congress should expeditiously take a crucial step towards overcoming the delay that now jeopardizes the transition: Congress should implore the

FCC to adopt a second, optional DTV transmission standard, DVB-T, that has been

quality-proven and widely adopted around the world, and for which an abundant

supply of transmitting and receiving equipment is already in place. Flaws in the

DTV transmission standard adopted in the U.S. (the ‘‘ATSC 8-VSB standard’’) prevent us and other broadcasters from providing a signal that can be easily received

by the millions of consumers using the small, simple antennas now so common. Sinclair is confident that adoption of a policy of flexibility with respect to transmission

technology represents a practical, time-efficient solution to the current DTV delay.

As Sinclair’s own testing demonstrated last year and an ATSC draft report on 8-

VSB recently confirmed, and a detailed study conducted by the University of Massachusetts concluded, the ATSC 8-VSB standard suffers poor performance under

‘‘multipath’’ conditions. As a result, the ATSC 8-VSB standard does not and will in

all likelihood never support consumer-expected ease of reception or reliable over-theair service to millions of television households lacking a clear line-of-sight between

their TV antennas and broadcasters’ DTV transmitters. For the most part, these are

the millions of households that use the small, simple, inexpensive set-top antennas,

rather than a large rooftop antenna. (It should be noted that the improved reception

performance of DVB-T with simple set top antennas could cause some consumers

to discontinue expensive cable and/or satellite subscription service, subscribed to in

order to overcome poor over-the-air analog reception.)

Largely because of these reception problems, the DTV transition has stalled. As

recent Congressional Budget Office Report explained, there will likely be little consumer acceptance of DTV if consumers have to do more than they now to do watch

over-the-air television. Less than 50,000 DTV receivers capable of receiving DTV

service have been sold in the United States to date (most of these to distributors,

retailers, and broadcasters), and at this rate it will likely be fifteen to twenty years

before U.S. broadcasters will be able to turn in their analog spectrum. By comparison, Sweden, with a population of less than nine million, launched DVB-TV in April,

1999, and by July, 2000, there were over 30,000 DTV receivers in consumers’ homes.

Sinclair believes that by granting each broadcaster the option of using either ATSC

8-VSB or the DVB-T standard, Congress can take an important step towards reviving this transition. DVB-T has been demonstrated to provide ease of reception and

reliable over-the-air DTV service—even under multipath conditions—to viewers

using small, simple antennas in broadcasters’ core business areas, including over

U.S.-sized 6 MHz channels at HDTV data rates above 19.4 Mbps, as demonstrated

during the DTV hearing.

II. ADOPTION OF AN OPTIONAL DTV TRANSMISSION STANDARD WILL NOT JEOPARDIZE

THE UNIVERSAL COMPATIBILITY OF DTV RECEIVERS WITH DTV BROADCAST STATIONS

Chairman Tauzin made clear at the DTV Hearing that American broadcast viewers must have DTV receivers that can tune into every DTV station in every market.

With such a universally compatible system, the Chairman points out, viewers will

be able to take their DTV receivers anywhere in the U.S. and make use of that investment. Sinclair agrees with Chairman Tauzin that the American public has a

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right to such a seamless DTV system, and believes that a decision to give broadcasters the flexibility to operate using DVB-T will not jeopardize this critical goal.

If the FCC gives broadcasters such flexibility, some proportion of DTV stations

will operate using ATSC 8-VSB, and some proportion of stations will operate using

DVB-T. In this environment, ATSC-only receivers will be unable to receive a signal

from DVB-T stations, and vice versa. Sinclair believes strongly, however, that such

‘‘single-mode’’ receivers will be rare. The consumer demand for DTV receivers that

can receive service from all DTV stations will likely far outstrip the demand for single-mode receivers, and, as a result, equipment manufacturers will design the vast

majority of receivers to be capable of receiving both ATSC 8-VSB and DVB-T programming.

Critically, there will be little or no disincentive weighing against manufacturers’

production of DTV receivers compatible with both the ATSC and DVB-T standards.

Counter to the claims of the ATSC proponents at the DTV Hearing, the incremental

cost to manufacturers of incorporating a DVB-T demodulation chip into their DTV

receivers will in all likelihood be minimal. After all, the DTV receivers sold today

in the U.S. market are already configured to receive signals with multiple modulation modes; these receivers are typically designed to receive signals from DBS systems, cable systems, NTSC stations, and 8-VSB broadcasters. In fact, the RCA DTV100 DTV receiver used by Zenith in its demonstration at the HDTV hearing, which

also happens to be the least expensive and largest selling consumer DTV receiver,

employs multiple modulation modes. It is irrational to conclude that the addition

of one more digital modulation standard will harm the marketability of these receivers. This is particularly the case with respect to the addition of DVB-T capability,

since there are already more than seven hundred thousand DVB-T receivers in service today in the U.K. and Europe, many times the number of 8-VSB receivers that

have been sold in the United States (largely to retailers) over almost the same period. Clearly, the equipment and expertise needed to incorporate this technology

into DTV receivers in the U.S. are readily available.

Certainly, the benefits of having a single, national transmission standard no

longer justify exclusive reliance on ATSC 8-VSB technology. Adherence to this regulatory principle clearly becomes counterproductive where, as here, the technology in

question has been shown to fall far short of expectations. Moreover, a flexible DTV

transmission policy would actually be consistent with the FCC’s overall approach to

DTV technology. The ATSC DTV standard itself is not a rigid one—the FCC avoided

inflexible standards for numerous other DTV operational parameters. There should

be similar flexibility in the basic selection of transmission technology.

The FCC no longer has any justification for singling out broadcasting for application of a ‘‘single standard’’ mandate. The FCC permits licensees in a variety of other

services, including DARS, MMDS, DBS, and PCS, to operate using any number of

transmission technologies. It is time for similar reliance on marketplace forces in

the broadcast context.

III. A FLEXIBLE POLICY THAT PERMITS DVB-T OPERATIONS IN THE U.S. WILL NOT

REQUIRE A MODIFICATION OF THE DTV TABLE OF ALLOTMENTS

At the DTV Hearing on July 25, 2000, certain pro-ATSC 8-VSB witnesses asserted

that if the FCC gives broadcasters the option to operate using DVB-T, such action

will require a modification of the DTV Table of Allotments. This is a scare tactic

that should be ignored by both the Subcommittee and the FCC. To date, there is

no technical data indicating any additional interference would result from the use

of DVB-T. In fact, there is evidence to the contrary. The FCC’s own Office of Engineering and Technology (OET) issued a report (OET 99/2) which stated ‘‘most NTSC

stations would receive 1 percent or less additional interference to their predicted

service area’’ (emphasis added). No modifications of the DTV Table of Allotments

would be required even if further data demonstrated the possibility of additional interference existed if the FCC follows Sinclair’s proposal and requires DVB-T broadcasters to employ means to avoid additional interference such as antenna beam tilting, antenna cut-outs, reduced power levels and/or use of on-channel repeaters to

avoid causing greater interference than what would result from 8-VSB stations’ operations at maximum permitted power levels. This policy would ensure that the

DTV Table would remain unchanged.

Any broadcaster who felt that any of the foregoing actions would result in inadequate signal coverage of his TV market could then simply use the ATSC 8-VSB

standard. Under the Sinclair proposal, a broadcaster would make the free-market

decision of which DTV standard best serves his viewers.

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1Sinclair notes that, with DVB-T, broadcasters will be able to operate single-frequency networks that permit on-channel retransmission facilities to operate at much higher power levels

and thereby provide greater coverage. In contrast to the simple on-channel feedback limited repeaters proposed for ATSC 8-VSB, single-frequency networks are not possible with that standard, since 8-VSB does not permit the operation of real synchronized transmitters at broadcastrequired power levels.

IV. UNLIKE ATSC 8-VSB, DVB-T WILL PERMIT THE OPERATION OF ON-CHANNEL

RETRANSMISSION FACILITIES

Chairman Tauzin also requested further testimony from the witnesses regarding

the ability of the ATSC 8-VSB and DVB-T transmission standards to support the

use of on-channel retransmission facilities. As discussed below, only if the FCC gives

broadcasters the option of operating using DVB-T technology will broadcasters be

able to fully utilize various on-channel retransmission methods. On the other hand,

such operations will be extremely limited if the FCC maintains exclusive reliance

on the ATSC 8-VSB standard.

In the analog environment, broadcasters fill in areas lacking a sufficiently strong

signal through the use of TV translator facilities. These separately-licensed facilities

receive a signal from a broadcaster’s full-power station, shift that signal to another

NTSC channel, and retransmit the same programming into the pertinent areas.

During the DTV transition, however, there will be significant congestion in the

broadcast TV spectrum, and those analog translators causing interference to DTV

operation will have to cease operation during that period. It appears unlikely, moreover, that there will be sufficient spectrum during that time to permit the operation

of digital translators.

If the FCC permits DVB-operations in the U.S., however, broadcasters will be able

to compensate for the loss of these translators. With DVB-T, broadcasters will be

able to utilize a variety of on-channel retransmission facilities to fill in gaps in their

coverage areas. Thus, DTV broadcasters will be able to use on-channel repeaters to

retransmit their DTV signals into areas otherwise unable to receive service due to

mountains or other terrain.

Unfortunately, such on-channel retransmission methods would be largely precluded if the FCC maintains exclusive reliance on the ATSC 8-VSB standard. Due

to what would effectively be self-generated multipath conditions, ATSC 8-VSB DTV

receivers in areas covered by on-channel retransmission facilities would likely be

unable to successfully receive a DTV signal.1

As a result, if the FCC maintains exclusive reliance on the ATSC 8-VSB standard,

those viewers who today rely on translators to receive over-the-air TV will likely

have no access to digital over-the-air service during the transition, and may lose access to over-the-air analog service as the DTV transition progresses and forces today’s translators off the air. A recently completed study of all licensed translators

determined that 32% of the nation’s 100 million television households (TVHH) are

located in areas served by one or more translators for over-the-air service or for delivery of a local over-the-air broadcast signal to a cable head end. Significantly, far

more TV households are likely to lose access to DTV because of the absence of DTV

translators and on-channel retransmission facilities than would fail to receive DVBT service at the far perimeters of TV markets. If the FCC does not permit DVBT operations, the result will be a true ‘‘digital divide’’ between rural and remote

areas of the United States and those households able to receive ATSC 8-VSB service.

V. SINCLAIR IS COMMITTED TO HDTV AND HAS NO PLANS TO LEASE ITS SPECTRUM

In his closing remarks, Chairman Tauzin expressed great concern about the availability of HDTV to American consumers and broadcasters’ plans to ‘‘lease’’ their

spectrum for use by other parties. Sinclair addresses these points here. First, no

matter what decision the FCC makes with respect to the DTV transmission issue,

HDTV will remain part of Sinclair’s DTV business plan. Sinclair is committed to

providing easy, reliable HDTV reception to all of its communities of license, and this

overriding goal has driven its efforts to convince the FCC to permit DTV operations

using DVB-T.

Contrary to the claims of some proponents of ATSC 8-VSB, DVB-T supports the

transmission of HDTV over U.S.-sized 6 MHz channels. In tests conducted by Sinclair in Baltimore during the summer of 1999 and in Las Vegas in April 2000, it

transmitted its DVB-T signal at an HDTV data rate of 18.67 Mbps. At the DTV

Hearing, Sinclair transmitted its HDTV programming at a data rate of 19.74 Mbps,

a higher rate than can be supported by the ATSC 8-VSB standard. In fact, DVBT’s COFDM-based technology will permit significant increases in signal capacity

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over time, and such improvements will likely permit high-quality reception at even

higher rates in the near future. In comparison, the 19.39 Mbps data rate for ATSC

8-VSB is fixed, and this data rate will inevitably be exceeded by an easily receivable

DVB-T rate.

Congress and the FCC have sanctioned broadcasters’ use of DTV spectrum for the

provision of ancillary services, and Sinclair expects to offer such services to its licensed communities. If permitted to operate using DVB-T, Sinclair and other broadcasters will enjoy increased service flexibility, and will be able to simultaneously

transmit an HDTV programming stream and other content streams, including

Standard Definition Television and various data streams.

In connection with the potential provision of such ancillary services, Sinclair cannot forever rule out any business strategy that might ultimately increase the return

on its enormous digital investment and fulfill its fiduciary obligation to its shareholders. Sinclair does not intend to lease or sell spectrum to other businesses or

broadcast consortia, however. Sinclair is not a participant in any of the spectrum

aggregation projects currently being considered by other broadcasters, and Sinclair

does not condone the decisions of other broadcast licensees to pursue such projects.

CONCLUSION

As Sinclair explained in its original testimony, it is time for the FCC to give

broadcasters the flexibility to operate using either the ATSC 8-VSB standard or the

globally proven DVB-T standard. If the FCC continues its current policy of inaction,

Congress should strongly urge the FCC to move forward to enable the American

public to realize the full promise of digital television in the twenty-first century.

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