May 27, 1998
(As prepared for delivery)
Thank you for inviting me here today.
Some say that creating a smooth conversion from analog to digital television is akin to Moses dividing the Red Sea, having the Hebrews traverse on dry land, and then causing the waters to drown Pharaoh's troops as they attempted to cross.
Back then, Moses was told by his agent: you accomplish that and I'll get you two books in the Old Testament.
Surely the digital conversion will take fewer miracles! Nor will broadcasters have to drown in a sea of red . . . ink.
But it's always good to take stock of where we are -- with just 157 days remaining before the DTV pioneers begin digital broadcasting.
Let me do a quick survey. By a show of hands, how many of you have filed applications for DTV construction permits? How many will file applications by the end of the year?
There is so much activity that it is hard to get the view from 30,000 feet. I will comment on some of the specifics of the DTV transition. But I also want to emphasize the big picture.
The progress reports the FCC received on May 1 were encouraging. Out of the 40 stations due to be on-air one year from today, 37 have submitted applications for construction permits. In addition, a surprising number of applications have been filed by medium and small market stations. Four stations report tower leasing problems (two in NY, one in Chicago, one in Detroit), and a citizens' group is appealing the approval of Sutro Tower in San Francisco.
My impression is that broadcasters have taken the deadlines seriously and are optimistic about moving forward. They are well on the way -- and some are even on the air with digital signals.
Consumer reaction has also been encouraging, when people see brilliant, high definition programming in demonstrations.
Sometimes discussions on digital television resemble the Tower of Babel. Inter-industry as well as intra-industry. Or even intra-company, for that matter, like TCI.
Folks are not always talking the same language. Broadcast, cable, DBS, consumer electronics manufacturers and computer companies all are focused on providing digital video transmissions to the home. But each of them sees the advent of DTV differently.
Consumers will determine the outcome. So the only way all of this makes sense is to view it from the eyes of the consumer.
What does the consumer want? How can we make it easy for the public to transition to digital? Will cable set top devices pass through the full-bodied high definition signal to a television set that the consumer has just purchased that is capable of displaying that signal?
Will these sets be cable ready? Will these sets be capable of hooking up to cable?
Consumer confusion will lead to consumer disaffection. Thus industry must find common ground by putting the consumer first.
I know it is a time of uncertainty. But just think . . . what if the decisions of the 1980's and 1990's had gone in a different direction -- leaving broadcasting out of the digital era?
Think of how disheartening it would be for broadcasters to stand by as the digital deals and debates take place with the other industries. In other words, it would be a dramatically different picture for the future of free-over-the-air broadcasting if digital video were only being introduced by cable, computers, and satellites.
Instead, free, over-the-air broadcasting is in the forefront of the digital conversion. And the opportunities for those with vision to launch exciting new revenue streams are enormous.
Remember: television did not enter the scene a triumphant financial success. It took pioneers like General Sarnoff and Stanley Hubbard Sr. to make that happen.
Now let's turn to some of the specific issues that are before the Commission.
The Commission must initiate a proceeding soon to address the difficult issues surrounding must-carry.
The Chairman and I have encouraged the cable and broadcasting industries to talk with each other with a view toward finding some common ground.
I know it is extremely unlikely that the industries will be able to completely resolve the issue on behalf of all stations and systems. But it is far preferable that broadcasters and cable avoid a new round of the must-carry "religious wars" of the '80's and early '90's that could harm both industries.
There are a host of sticky issues involving the must-carry:
The Commission is expected to address must-carry in a proceeding this summer. We will be asking for comments on a wide variety of questions -- many originating with MSTV and the NAB.
A part of the solution may be a matter of timing. As cable systems upgrade and add digital capacity, the ability to carry broadcast digital transmissions will increase.
Set Top Boxes and Cable Compatibility
Winding our way through the set top devices debate is a bit like being Jonah inside the whale -- without a match.
Since hearing in January about the TCI order for boxes that were incapable of passing through certain DTV formats, I have used the power of the "bully pulpit" to encourage cable operators to insure their converter boxes are compatible with all DTV formats. Otherwise, actions by one party could completely undermine the ability of broadcasters to deliver what they have selected as the format best for their viewers.
With the cable industry's support, the Commission permitted a range of DTV formats. I do not wish to see a bottleneck provider come between the broadcaster and its viewers on preferred formats.
The statute requires the Commission to make rules that ensure set top devices become available through retail outlets and by means other than cable providers. These devices are beginning to look less and less like cable tuners and decoders, and more and more like computers. Some manufacturers believe these devices, when available in a new retail markets, can accelerate the transition to digital broadcasting and other digital services.
The Commission plans to adopt our first Report and Order on the Set-Top Devices at our open meeting on June 11th. As I noted earlier, we will follow shortly thereafter with the launch of the must-carry proceeding.
The Commission is working with the Local and State Government Advisory Committee and broadcasters to identify, as early as possible, any markets where tower siting may pose a problem.
Some tower issues have already been identified in the top 10 markets, but most of the problems are of a commercial nature. It is too early yet to know whether stations will face difficulties in obtaining local approvals in the remaining large and medium sized markets.
Broadcasters need to start communicating with local authorities for zoning and other approvals as soon as possible. Even if a broadcaster plans to use the same tower, it would be wise for that information to be shared with the local authority as soon as it is known.
I will be chairing a "strike force" to assist in answering questions from local authorities and helping to advance the approval process for broadcasters. If a station encounters obstacles to the necessary local government approvals, you may wish to give me or Anita Wallgren (in my office) a call.
Working with the Local and State Government Advisory Committee, we have learned that often the solution is one of educating the local government about the station's plans and needs. The FCC, in cooperation with the NAB and the Advisory Committee, has developed informational "fact sheets" and a list of frequently asked questions about DTV. You may access them on the FCC's website: fcc.gov.
Canadian and Mexican Coordination
I am pleased to report progress on the coordination process with Canada and Mexico.
Canada and Mexico are not as far along as the U.S. in the regulatory or business development of DTV. The adoption of our allotment table and the requests we've made to coordinate applications have caused both countries to work at top speed to develop their allotment tables.
Our International Bureau's latest news is that Canadian approval of the five volunteer stations in the northern tier of states is imminent; and Canadian approval of the remaining stations is expected later this summer.
The FCC is also engaged in discussions with the Mexican government regarding the Mexican table of allotments. We've identified the three volunteer stations in Los Angeles as top priority for Mexican approval. We may have these approvals as soon as June 9th.
Fees: The Commission has received comments on the subject of fees for ancillary and supplementary services and has extended the deadline for reply comments until August 3rd.
As you may know, the commenters have suggested fees ranging from 1% to 10% of gross revenues . . . just a small difference of opinion!
Licensing Process: As you have already heard this morning, the Commission is working on our licensing and applications process, as well as a number of petitions for reconsideration.
At the time we finalized the service rules and table of allotments in January, I emphasized my concern that we clarify our processing priorities in a public notice. MSTV has been helpful in "keeping our feet to the fire." I expect that the Commission will approve a comprehensive public notice in the next few weeks. Such a notice should go a long way to providing guidance to you, your attorneys and consulting engineers on the Commission's priorities and what documentation you need to submit with your application.
Technical standards: There are a myriad of digital standards that still need to be set.
For example, I hope that broadcasters, cable operators, and television and set-top manufacturers will soon agree on a voluntary protocol to harmonize cable and broadcast channel naming, numbering and navigating.
I have every expectation that the industries will continue to work to establish all of the voluntary standards necessary to complete the digital rollout.
While many tough regulatory and technical issues remain, I am encouraged by what is happening in the broadcasting industry.
I am a believer in digital television. I will continue to take steps to ensure that consumers reap the benefits from this historic transition.
Broadcasters have the opportunity to reinvent television. I believe that we are well underway to seeing the benefits of digital video technology made available to all Americans -- not just those who subscribe to DBS, cable, or other pay services.