122 Stations and Nothing On

Electronic News, April 17, 2000 by Jerry Ascierto

While the promise of digital television (DTV) continues to captivate consumers, the reality continues to be stalled by a cacophony of dueling agendas.

At the National Association of Broadcasters (NAB) 2000 show held in Las Vegas last week, William Kennard, chairman of the Federal Communications Commission (FCC), blasted NAB for "squandering its goodwill" in the long-awaited and slow-moving rollout of DTV transmission and low-power FM radio stations.

Eddie Fritts, NAB president and chief executive officer, promptly retaliated, blaming the government for dragging its feet on the technical and business aspects of DTV transition. Fritts said the high cost of equipment that would allow a smaller- or midsized TV station to transition to digital could also put that station out of business.

"As exciting and wonderful as the transition to digital is becoming, if you're a small- or medium-market television station, you have to look at borrowing more than the asset value of the station to transition to digital," Fritts said. "If the government has done a half-baked job of bringing this to fruition, it provides significant challenges to small- and medium-market television stations. In my view, there will be a large public issue over the FCC's failure to shepherd the transition to digital for all size markets," Fritts said.

"The net of this is that you have a lot of rural areas that are not going to enjoy the benefits of digital. And that is laid clearly and definitively at the doorstep of the FCC," he added.

This round of rhetoric comes fresh on the heels of a proposed delay of the DTV rollout authored by NAB, the Association for Maximum Service Television, and the Association of Local Television Stations in February. The FCC ultimately rejected the proposal.

To meet an FCC mandate, the Consumer Electronics Association (CEA) this month must resolve the technical issues of DTV interoperability and labeling. The CEA last week urged NAB to comply with the FCC, while issuing its monthly DTV sales report.

"We've seen, very clearly, the link between available content and consumer electronics product sales," said Gary Shapiro, CEA president and CEO. "Moving forward, broadcasters' willingness to step up and deliver on DTV could have a significant impact on the pace of the DTV transitionaand the future of free, over-the-air television."

"We urge the broadcast community to accelerate their programming efforts and deliver on DTV," Shapiro said.

CEA data indicates only a mere 17 percent, or 24,631 of the 143,218 total DTV products sold in 1999 (including monitors, integrated sets, and digital set-top receiver/decoders), were actually located in a place where they could receive digital broadcasts. The number of stations in the United States that are engaged in DTV broadcasting is now 122, reaching 62.2 percent of all television households, according to NAB. However, there is a total of 2,194 licensed television stations in the United States, according to the FCC.

"Consumers are opting to purchase high-resolution monitors, even when programming is not widely available, to use with DVD players and prerecorded digital content," said Todd Thibodeaux, CEA vice president of Market Research.

The growing pains of DTV don't appear to be leaving the awkward stage anytime soon. According to the CEA's newly revised DTV sales projections, if broadcasters choose the "fast lane" of DTV rolloutathat is, if broadcasters demonstrate 100 percent compliance with the FCCa DTV product penetration could reach 50 percent by 2006.

If, however, 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.