January 2009

In his first weekly address since being sworn in as the 44th president of the United States, President Barack Obama discusses how the American Recovery and Reinvestment Plan will jump-start the economy. He again promised to rebuild and retrofit America to meet the demands of the 21st century. "That means repairing and modernizing thousands of miles of America's roadways and providing new mass transit options for millions of Americans. It means protecting America by securing 90 major ports and creating a better communications network for local law enforcement and public safety officials in the event of an emergency. And it means expanding broadband access to millions of Americans, so business can compete on a level-playing field, wherever they're located."

On Friday evening, Senate Commerce Committee Chairman John Rockefeller (D-WV) announced a bipartisan compromise to the DTV Delay Act introduced last week. The amended DTV Delay Act will retain the extension of the digital transition date to June 12, 2009. Additionally, the agreement extends the Federal Communication Commission's auction authority to pay for the costs of the delay, reaffirms a broadcasters' right to make the transition before June 12, permits the FCC to award vacant spectrum space to public safety officials, and fixes the converter box coupon program. Sen Kay Bailey Hutchison (R-TX), the ranking Republican on the Commerce Committee, identified four key provisions of the bill: 1) In order to better educate consumers about the transition, and to provide consumers with ample opportunity to utilize the converter-box coupon program, the digital transition will shift from February 17, 2009 to June 12, 2009. 2) Over-the-air broadcast television stations may voluntarily switch from analog to digital service before June 12, 2009. Stations that are fully prepared for the switch can make the transition early through a FCC process. In addition to the several markets that already have made the transition, many additional markets are expected to be prepared to make the transition prior to June 12, 2009 - this bill will permit these stations to transition early and bring consumers the advantages of digital service as quickly as possible. 3) In the event a broadcast station switches early to digital service, public safety services may start using the vacated spectrum. 4) Consumers with expired coupons may apply for new replacement coupons. This provides relief to consumers who, because of natural disasters, retail or mail issues, were unable to redeem their coupons.

[Commentary] The problem with the digital television transition is the digital-to-analog converter box program. It is ineffective. The problem is that it is ineffective. In recent research, one of us found that the coupons increased the price of the boxes by almost the amount of the coupon. The coupon program therefore primarily subsidizes retailers, not consumers. The Federal Communications Commission should require stations to continue their analog transmissions for two weeks in order to continuously broadcast a simple full-screen message that reads and also says aloud, "Your television needs a digital converter box. For more information..." This plan would not be free. Not all analog signals have to shut down to accommodate other uses, and those station owners could be subsidized a small amount to maintain the broadcast. A larger expense would involve compensating the wireless providers who paid $19 billion for this spectrum to wait for two weeks before beginning their transmissions. A two-week delay probably would not be a big burden on the providers as they have yet to deploy systems fully and have not sold any relevant devices to consumers. Had the Commission and Congress better thought through the problems earlier, they could have mandated such broadcasts for at least one week prior to the analog shutdown. They could also have had monthly test markets like Wilmington, N.C. We would then have had at least 10 fully functioning digital markets and would have learned many more lessons about the transition. (Rosston is the deputy director of the Stanford Institute for Economic Policy Research and the Public Policy program at Stanford University and served as the deputy chief economist of the Federal Communications Commission from 1994 to 1997. Wallsten is vice president for research and a senior fellow at the Technology Policy Institute.)

[Commentary] The laws and regulations governing TV will not be immune to sweeping overhaul under the new Obama Administration. In fact, change is already underway at the Federal Communications Commission and in Congress, the two main regulators of television and related industries, in the form of new leadership. The change in policy will play out over the next four or more years, issue by issue. Some will be new Obama initiatives. Others are unfinished business from the Kevin Martin (and earlier) FCCs. Berg highlights nine unfinished issues: 1) Postponing the Feb. 17, 2009 DTV transition date. 2) Digital translator and "nightlight" extended analog service FCC rulemakings/initiatives. 3) Must carry for TV digital multicast video signals. 4) LPTV transition to DTV. 5) Reform of the retransmission consent complaint process/enforcement. 6) Indecency regulation. 7) Regulatory status of AT&T U-Verse and Verizon FiOS. 8) Product placements. 9) Media ownership issues.