```

[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

             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

                    U.S. GOVERNMENT PRINTING OFFICE
65-906CC                    WASHINGTON : 2000

                    ------------------------------  

                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   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,              EDWARD J. MARKEY, Massachusetts
  Vice Chairman                      RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               BART GORDON, Tennessee
PAUL E. GILLMOR, Ohio                BOBBY L. RUSH, Illinois
CHRISTOPHER COX, California          ANNA G. ESHOO, California
NATHAN DEAL, Georgia                 ELIOT L. ENGEL, New York
STEVE LARGENT, Oklahoma              ALBERT R. WYNN, Maryland
BARBARA CUBIN, Wyoming               BILL LUTHER, Minnesota
JAMES E. ROGAN, California           RON KLINK, Pennsylvania
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi                          JOHN D. DINGELL, Michigan,
VITO FOSSELLA, New York                (Ex Officio)
ROY BLUNT, Missouri
ROBERT L. EHRLICH, Jr., Maryland
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)

                            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)

  

 
             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 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 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 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 all-signal 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 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 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.
    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 Corporation; 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.
    [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?
    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, 
real-world 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 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. Side-by-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 large-size 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 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 multi-billion 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 
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
---------------------------------------------------------------------------
    \1\ See 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).
---------------------------------------------------------------------------
                     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 over-the-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 wind-blown 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 in-process 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.
---------------------------------------------------------------------------
    \2\ See ``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).
---------------------------------------------------------------------------
    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 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.
---------------------------------------------------------------------------
    \3\ ``ATSC Initiates Standards Activity to Explore VSB 
Enhancements,'' Advanced Television Systems Committee (June 28, 2000).
    \4\ Performance 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).
---------------------------------------------------------------------------
    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 ``backwards-compatible'' 
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.
---------------------------------------------------------------------------
    \5\ See Petition for Expedited Rulemaking, Sinclair Broadcast 
Group, Inc., MM Docket No. ------ (October 8, 1999).
---------------------------------------------------------------------------
    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 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, DVB-T 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 over-the-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
---------------------------------------------------------------------------
    \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).
    \7\ See, e.g., ``Application of On-channel Boosters to Fill Gaps in 
DTV Broadcast Coverage,'' R.W. ``Sam'' Zborowski, ADC 
Telecommunications.
---------------------------------------------------------------------------
    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.
   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
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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 alone, such analog sets will be unable to receive that digital 
programming over-the-air 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.)
---------------------------------------------------------------------------
    \9\ See ``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).
---------------------------------------------------------------------------
    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-the-air 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 DVB-T 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.
    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.
    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 real-
time 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 physics 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 
available 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 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.
    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-to-home 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 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-the-air 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 exceptions, 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.
    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.
    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 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.
    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 network-
affiliated stations are on-the-air.1
---------------------------------------------------------------------------
    \1\ A complete summary of the specific DTV stations that are on-
the-air is attached as an Appendix to this statement.
---------------------------------------------------------------------------
    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;
 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 first-hand 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.
    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.
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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    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 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.
    [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, high-quality 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 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 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.
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 two-
thirds 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.
---------------------------------------------------------------------------
    \1\ These include stations in New York, Los Angeles, Boston, 
Philadelphia and Washington, D.C.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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 
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 data-rate 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
---------------------------------------------------------------------------
    \3\ See 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.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \10\ See DTV Report on COFDM and 8-VSB Performance, FCC/OET 99-2 
(dated Sept. 30, 1999) (the ``OET Report'').
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \11\ Id. at Figures 2-7.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \12\ OET Report at page 27.
---------------------------------------------------------------------------
    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 
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.
---------------------------------------------------------------------------
    \13\ The 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.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
  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.
---------------------------------------------------------------------------
    \15\ Fourth Report and Order, 11 FCC Rcd at 17787-17791 (1996).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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 
/www.transmitter.com/DTV/NatOstroff.html, visited October 8, 
1999).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \17\ OET Report at page 24.
---------------------------------------------------------------------------
    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-the-air 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.
---------------------------------------------------------------------------
    \18\ See Fourth Report and Order, 11 FCC Rcd at 17788.
---------------------------------------------------------------------------
    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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[GRAPHIC] [TIFF OMITTED] T5906.019

    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 2\1/2\ 
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.
    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:]
    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 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-compliant 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\
---------------------------------------------------------------------------
    \1\ See Comments of NxtWave Communications in MM Docket No. 00-39 
(May 17, 2000).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \2\ The NXT2000 was developed prior to the availability of off-air 
DTV signals.
---------------------------------------------------------------------------
    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.
[GRAPHIC] [TIFF OMITTED] T5906.020

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. 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.
    Figure 1 also demonstrates that the ATSC system operates with low 
signal levels at which COFDM reception fails.
[GRAPHIC] [TIFF OMITTED] T5906.021

 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

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.
    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.
---------------------------------------------------------------------------
    \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.
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    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.
    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 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.
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 two-thirds 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.'' 
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.
[GRAPHIC] [TIFF OMITTED] T5906.022

[GRAPHIC] [TIFF OMITTED] T5906.023

    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 
advertiser-supported TV. No free HDTV over the air for us. How 
can we simply 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 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-the-air 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 invested $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.

                      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.
    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 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 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 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:]
        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 
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 businesses 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.
    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 co-op 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 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 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.
    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, 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 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 authority: 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.
    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 \1/30\th 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 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 over-the-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.
    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 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 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?
    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 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 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 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?
    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.]
    [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-the-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, 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 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 DTV-100 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.
 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
---------------------------------------------------------------------------
    \1\ Sinclair 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 broadcast-required power levels.
---------------------------------------------------------------------------
    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 DVB-T service at the far perimeters of TV markets. If 
the FCC does not permit DVB-T 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, DVB-T's COFDM-based 
technology will permit significant increases in signal capacity 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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