Free over-the-air television broadcasts have been available to Americans for more than 50 years. According to the National Association of Broadcasters, the average television market includes over-the-air signals from at least seven local broadcast stations. Commercial stations may get their programming content through an affiliation with one of the top seven television networks (ABC, CBS, Fox, NBC, PAX, UPN, and WB) or they may be an independent broadcaster. Some commercial television stations are owned by large media companies or other corporations; others are owned by individuals or small companies. The United States also has 380 public television stations that receive funding from a variety of sources, including federal funding, state funding, commercial grants and donations, and private donations from individuals. Public stations tend to show more educational and arts programming, and many of these stations are affiliated with the Public Broadcasting Service (PBS). In addition to over-the-air availability, most broadcasters are carried on local cable television systems along with numerous cable programming channels. Also, satellite television providers now offer subscribers the signals of local broadcasters in approximately 40 television markets. In fact, according to FCC, more than 86 percent of television households nationwide now subscribe to some type of multichannel video programming service, such as a cable or satellite provider, rather than relying solely on over-the-air broadcast television. Since its inception, the broadcast television industry has relied on “analog” technologies to transmit over-the-air television signals. During the last few decades, however, media of all types have been transitioning to “digital” technologies. Because digital technologies can provide greater versatility and higher quality pictures and audio than traditional analog technologies, the broadcast television industry supported, and Congress and FCC mandated, a transition of broadcast television stations from analog to digital technology. This decision was based on the notion that a transition to digital television would bring the broadcast television industry into the 21st century with current and competitive technology, and would help to preserve for consumers the benefits of a healthy free over-the-air television service in the future. Traditional television broadcasting uses the radiofrequency spectrum to transmit analog signals—that is, signals in which motion pictures and sounds have been converted into a “wave form” electrical signal. Traditional analog signals fade with distance, so consumers living farther from a broadcast tower will experience pictures that are distorted or full of “snow.” With digital technology, the analog wave form is converted into a stream of digits consisting of zeros and ones. Although digital signals also fade over distance, because each bit of information is either a zero or a one, the digital television set or receiver can adjust for minor weaknesses in the signal to recreate the zeros and ones originally transmitted. Pictures and sound thus remain perfect unless significant fading of the signal occurs, at which point the transmission cannot be corrected and there is no picture at all. Digital technology also makes it easier to offer high definition television (HDTV). With HDTV, roughly twice as many lines of resolution are transmitted, creating a television picture that is much sharper than traditional analog television pictures. Another advantage of digital television is that “digital compression” technologies allow for more efficient use of the radiofrequency spectrum than analog technologies. Using digital compression, broadcasters will have the opportunity to use the 6 megahertz of spectrum required to broadcast one analog television show to transmit four or five different digital “standard definition” television shows simultaneously. This process of using the digital spectrum to show multiple programs at once is known as multicasting. To enjoy HDTV broadcasts or to be able to see multicasts of digital signals, consumers must own a television monitor that is capable of displaying these features and a digital tuner that is capable of receiving the broadcasts. The DTV transition involves a substantial overhaul and replacement of the stations’ transmitting and studio equipment as well as the eventual replacement of consumers’ analog television sets or the attachment of “digital converter boxes” to those analog sets. Thus, building DTV stations involves a large outlay of capital and effort by the broadcast television industry. Sometimes a new broadcast tower or significant modifications to an existing tower are required for the digital antennas. Broadcasters must purchase digital transmission equipment, obtain digital programming, and acquire equipment for converting analog programming to digital. One station representative with whom we spoke noted that broadcasters must then incur the costs of running two stations simultaneously during the transition period, even though viewership and advertising revenues are likely to remain roughly the same. To facilitate the transition, Congress and FCC temporarily provided each full-power television station (both commercial and public) with another 6 megahertz of radiofrequency spectrum so that they could begin broadcasting a digital signal. A transition period was established during which broadcasters would build their DTV stations and simultaneously transmit both analog and digital signals. In 1997, FCC established a timeline for this transition period. By May 1, 1999, the affiliate stations of the 4 largest networks (ABC, CBS, Fox, and NBC) in the top 10 television markets in the country were to have a digital signal on the air. By November 1, 1999, the affiliates of the 4 largest networks in the top 11 to 30 television markets were to have a digital signal on the air. By May 1, 2002, all full-power commercial television stations across America are to have a DTV signal on the air. By May 1, 2003, all public stations are to be broadcasting a DTV signal as well. The few stations that missed the earlier 1999 deadlines were granted extensions by FCC. In March 2002, FCC closed an application period for stations that have May 2002 deadlines to file for extensions. FCC said it will not issue any type of blanket waiver of the deadline, but it would allow extensions on a case-by-case basis. According to FCC, it also has the authority to sanction stations that do not meet their deadlines. FCC said it is currently considering what those sanctions might be and under what circumstances the sanctions might be imposed. The goal is for the transition period to end in December 2006. By that time, the analog signals presumably are to be shut off, and Americans are to be watching DTV broadcasts on either a DTV set or on an analog set with some form of a digital converter box. The government is supposed to “repack” the digital stations within channels 2 to 51. The federal government has reallocated some of the spectrum in channels 52 to 69 for public safety needs and some for commercial uses (such as mobile phone services). The public safety spectrum is currently being licensed, and the spectrum set aside for commercial uses will be auctioned later this year. However, Congress created exceptions to the 2006 date. In the Balanced Budget Act of 1997, Congress stated that no analog television station license was to be extended beyond December 31, 2006, except in cases where (1) one or more of the top four network affiliates in a market is not yet on the air in digital, (2) digital converter technology is not generally available in the market, or (3) 15 percent or more of the households in the market cannot receive DTV signals. The last exception—often referred to as “the 85 percent rule”—has the potential to significantly delay the cutoff of analog signals and the turnback of some spectrum beyond 2006. This is because the 85 percent rule might rely on consumer adoption of DTV equipment, which is currently market-driven (i.e., based on consumer demand, rather than on a government mandate) and does not appear at the present time to be progressing at a rate that will reach 85 percent in the next 4 years. In this section, we address several issues related to the progress of broadcasters to date in getting digital signals on the air. In particular, we discuss (1) the status of broadcasters in building the DTV stations; (2) the amount of digital, high definition, or multicast programming that stations are showing or planning to show; and (3) the stations’ perceptions of consumer interest in DTV and how broadcasters are promoting or planning to promote DTV to consumers. As of April 12, 2002, 24 percent of commercial television stations (298 of 1,240) had completed construction of DTV stations and were broadcasting a digital signal. Most Americans now have available to them an over-the-air signal from at least 1 DTV station, and many Americans living in larger television markets have several DTV signals available to them. Only 119 of the 298 current DTV stations were mandated to be broadcasting a digital signal before May 2002. Thus, some stations have elected to build their DTV stations and begin broadcasting a digital signal before they were required to do so. As for the progress of transitioning stations, we conducted interviews with representatives from a few transitioning stations and found them to be in various stages of building their DTV facilities. For example, one station had just begun planning for the construction of its DTV station and was currently analyzing its tower and equipment requirements, while another station was almost ready to start broadcasting a digital signal, several months before the deadline. Once on the air with a digital signal, broadcasters have been given some flexibility in determining how to structure their DTV services. A station can simply duplicate the programming shown on its analog channel by “converting” it to digital, or it can provide programming actually filmed in digital, which can include HDTV. A station also can choose to multicast or to take advantage of the ability of DTV to transmit text or data, such as stock quotes or electronic newspapers. There are concerns that if broadcast stations use their digital channel largely to duplicate the programming from their analog channel, consumers would have little incentive to purchase digital televisions sets and cable systems would have little incentive to carry broadcasters’ DTV channels. This lack of DTV adoption could delay the goal of having broadcasters vacate the spectrum in channels 52 to 69 by the end of 2006 to make the spectrum fully available for public safety and other uses.