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William E. Kennard
Federal Communications Commission
The International Radio and Television Society
New York, NY
September 15, 1998
(as prepared for delivery)

Thank you, Peggy, for your introduction.

Many people are making predictions today about the future of digital television. People are always making predictions about the fate of new technologies.

Here are some predictions I found on the Internet.

In 1899, Charles Duell, Commissioner, U.S. Patent Office, said that "Everything that can be invented -- has been invented."

Not a smart thing to say.

Here's a more recent prediction that's interesting. In 1981, Bill Gates of all people said of computing power, "640 kilobites ought to be enough for anybody."

A year later, in 1982, IBM issued a statement saying that "$100 million dollars is way too much to pay for Microsoft."

And here's the latest prediction about digital television from Peggy Conlon's terrific magazine, Broadcasting & Cable: "Digital television is in danger of being declared dead on arrival."

People are making lots of predictions about the future of digital television. And, with all due respect, Peggy, I think that people will read that pronouncement and chuckle.

When it comes to digital TV, some may have doubts, but there should be no doubt about this:

Digital is the future of TV.

Today, I come to deliver a single message about digital TV and that's this: The transition to digital TV is inevitable, but the pace of the transition will be set by the private sector. And we in government should not set up the industry for failure by creating false expectations or, worse, micromanaging what you should do with this promising technology.

There's no more relevant guide to the future than the past.

Take the frequently-voiced concern that the first generation of digital television sets will be too expensive.

Of course, they will be. If you control for inflation, the first color TV sets in 1955 cost about $4500. For that matter, when the first radios hit the market, it took a big chunk out of the average paycheck to own one.

The entire history of the introduction and pricing of consumer electronics equipment tells us that soon enough DTV receivers will be increasingly affordable.

In fact, it's already happening. When Panasonic digital TVs hit the market in U.S. stores this summer, they were already $1,000 less than predicted by industry representatives at a congressional hearing just one month earlier.

When color TV debuted, there was no immediate rush to get sets into our living rooms. But people did line up outside of Macy's and other stores to watch this novelty -- and quickly realized how much color enriched the viewing experience.

Soon, people in neighborhood sports bars will be seeing football on digital. Chuck Dolan at Cablevision wants to put HDTV in movie theater lobbies. That kind of exposure will drive demand and bring down prices.

But digital TV is not just HDTV. Digitization will allow the creation of entire new products.

Consider the recently formed Advanced TV Enhancement Forum, a coalition formed by Microsoft, Intel, Disney, DirectTV, CNN, and other media and technology firms.

Here's a computer software firm, a hardware firm, a studio, a satellite video provider, and a cable programming network -- all coming together to make digital work for the marketplace.

Could this be the convergence we have all been hoping for? I think it is. And it is a great thing -- the best marketing minds in TV, electronics, software, entertainment, and other industries are focused on how to develop this new application.

The Forum recently agreed on a universal standard for enhanced TV content, whether transmitted over the air, from cable, or by satellite.

That'll promote the development of content for interactive TV.

Here, too, history is a guide.

Remember the shift from radio to television in an earlier generation? The first TV programming migrated to television from radio -- serials like Gunsmoke. As TV matured, the pioneers of TV programming began to innovate within that new medium, and create programming and entertainment never seen before.

During that period, a radio comedian, Fred Allen, quipped, "Why do we call TV a medium? Because it's never well-done."

Well, as we all know, after a while there was much that was well done -- including his own appearances.

The real, long-term development of DTV will be driven by new content and applications. For DTV to develop, there needs to be content available to get the ball rolling. This will happen because the networks will soon begin to offer digital programming, while cable, movie studios, software developers, and others will provide their own digital content.

The fact is, entertainment and other content are becoming more digital every day.

80 million Americans are on-line.

More than half of the 16 to 34 year-olds use the Internet.

People in homes with Internet access watch 15% less television.

Today we see increasing investment directed toward Internet/TV convergence. WebTV has sold over 400,000 units -- and the manufacturer will tell you that it hasn't begun to realize all the ways people will use the device. Flat screen technology is making inroads in both the computer and home entertainment industries.

Last year, online sales of entertainment products totaled $298 million. By 2001 they are expected to grow to $2.7 billion.

Now what do these facts tell us? Two things:

First, that all segments of the global communications industry are going digital.

Because a digital bit stream means you deliver your content -- whether that is entertainment, advertisement, a daily newspaper, or e-mail -- better, faster, and cheaper.

Second, that only the private sector can develop content. And it will.

Digitization is here. It's inevitable. It will benefit the economy. It will benefit consumers.

It will change our lives.

But that's not to say the digital TV roll-out will not be complicated.

When analog television rolled-out in the late 1940s, RCA and a small handful of other firms controlled it from soup to nuts: content creation, long-haul and last-mile distribution, and the manufacture of consumer devices.

The roll-out of DTV, on the other hand, involves many industries. Broadcast. Cable. Consumer electronics. Computer. Entertainment.

Let's not kid ourselves. The rollout of DTV is more complex in many ways than the roll-out of analog.

After all, from what your people tell me when they come to visit our offices, nobody has the answer to the who, what, where, when, and how of digital TV.

The broadcast, cable, consumer electronics, computer, and entertainment industries have all told us of their investment plans, expressed their uncertainties, and lobbied for regulations and laws to protect and further their interests in a digital world.

Each of these industries has a role to play in realizing the promise of DTV.

And what is the role of government? This much is very clear: The role of government is not to supply the business plan for digital TV. Or to put artificial limits on the industry's business plans.

Industry may look to government the way it often does: by seeking a regulatory advantage in the marketplace -- or, if they think they are better served, they'll try to keep government out of the marketplace entirely.

They will also seek to goad the government by playing the blame game. They'll say that without government intervention the public will be deprived of DTV.

It's government's job to see when arguments are distorted by the prism of self-interest.

And we must ensure that the public interest is paramount.

Here's what we in government must do:

Government has an obligation to make sure that the valuable spectrum is put to use by the industry.

This is why we imposed a buildout requirement. Stations in the top-ten markets are required to be on the air with a digital signal by next May.

And I'm pleased that many broadcasters are stepping up.

24 TV stations have volunteered to be on the air by this November 1 -- only 46 days from today.

As of this week, a total of 175 TV stations have filed applications with the FCC to begin digital TV broadcasting.

Having set in place the build-out schedule, we then turned to removing whatever barriers may exist:

We've secured international agreements on digital TV spectrum use.

We created a strike force to work with local authorities to target zoning, engineering, construction, safety, and other issues.

We are issuing a consumer bulletin that will provide consumers with current DTV status information. It will identify possible DTV compatibility questions for consumers to ask their local cable operator or broadcaster.

Last month I sent a letter to the heads of the cable and consumer electronics industries urging them to complete interoperability solutions for cable consumers who purchase DTV receivers. We received a quick response both from NCTA and CEMA saying they're doing whatever they can to fix compatibility problems. I look forward to continued progress on both short-term and long-term solutions. Beyond this we will remain vigilant in our lookout for bottlenecks -- where we see them we will spur industry players to remove them.

Finally, we have been asked to decide the relationship between broadcasting and cable in a digital age. Broadcasters want the government to extend their right to cable carriage to new digital channels, asserting they bring a unique, free public service to Americans. As cable operators create local programming, particularly news and public affairs shows, and with almost three quarters of Americans actually paying to receive these channels, what remains that makes broadcasters unique? And is this uniqueness significantly tangible, demonstrable, and assured to justify requiring cable carriage?

Beyond this limited role for government we must trust in the marketplace.

Of course, trusting in the marketplace means giving businesses the opportunity to fail too.

The week before last "Your Choice TV," an interactive TV venture backed by Discovery Communications and TIC, Inc., closed shop. It was, reported USA Today, an idea ahead of the marketplace.

In any new medium there will be risktakers ahead of the marketplace, some of whom fail to make it. Who here remembers the DuMont network?

The convergence from analog to digital is a transforming event.

Like all transforming events there will be those who figure out the killer applications and those who are left behind. We'll see winners and losers. We saw that in the transition from tubes to transistors. We saw that in the transition from mainframe to PCs. We'll see it in digital. The important thing is that consumers get to decide.

But there will also be exciting new breakthroughs in technology, new products and services, and new ways of thinking about our society's most pervasive and powerful news and entertainment medium.

You know, the other day, like most of you, I sat and watched the Emmys. Every time the camera cut to the audience it reminded me how much creativity we see on TV these days, whether comedy or drama, writer or producer or actor or lighting technician.

The Emmys showed these retrospectives about past television shows and experiences. During those retrospectives we were all reminded of the creativity we've enjoyed over the last half century, whether Lucille Ball or Ed Murrow.

It's a collaborative medium. You can write a brilliant script but you need actors to bring it to life. And the actors need people behind the cameras, and others to edit the raw footage and create the sets.

But out of that collaboration has come a rich, varied means of communication.

Now we enter a new phase in that collaborative process that will involve every sector of the communications business. That's why digital television is the most exciting development in TV today.

Broadcasters have been given a great opportunity. The American people have given you a completely new palette. In the years ahead you'll create richer ways to entertain and inform.

Develop your business plans. Make your investments. And be confident, as I am, that what lies ahead is a bright future.

Thank you.

- FCC -