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Government and Industry Moves

Sepember 23, 2007

This week: Sharp and Pioneer pool talents, NASCAR gets HD -- as does CNN, DirecTV gets more HD, the TV industry tells the FCC to forget consumer education mandates, the Senate aging committee has a good DTV hearing, and finally, the House schedules what promise to be two tense October transition hearings.

Sharp and Pioneer are joining forces to become more competitive in the rapidly developing consumer electronics marketplace. Sharp is taking a 14.3% stake in Pioneer, while Pioneer will buy less than 1% of Sharp's outstanding shares.

Both companies will benefit in their respective production of Blu-ray Disc players, with Sharp providing blue laser diodes and Pioneer sharing its drive module technology.

Mobile electronics will see Sharp display technology combine with Pioneer's car navigation expertise.

Pioneer, which now sells only plasma TVs, will start marketing smaller (than 42") LCD TVs using Sharp panels. Pioneer also plans to use a portion of the funds from Sharp to bolster its plasma business.

NASCAR has grown to be the second largest U.S. spectator sport after pro football. Kind'a snuck up on a lot of us. It's a big business with a highly enthusiastic fan base, and ESPN wants to make it even more so. It's the kind of sport that will benefit hugely from high-definition coverage.

So this year everything will be in HD, including HD cameras inside all of the cars. That's about 65 HD cameras all together -- about 20 with people attached. HD views of everything!

To make some sense of all of these eyes, there will be four mobile studios/control rooms, including one with 19 42" HD monitors. Radio communications from all 43 teams will be available to complete the fly-on-the-wall experience for viewers.

CNN this month officially switched to HD. You may not be able to see that for yourself, but trust me (as they say). If you have DirecTV HD service, you should be able to vouch for its HD-ness, and we're all hoping cable companies will see the light and make the necessary contractual and technology upgrades to present CNN in native high-def.

As with most of these things, all of CNN's coverage will not be in HD -- these things take time -- but they're working on it. Some will be HD, and some SD for now.

CNN is planning a big HD splash to wow those viewers who can get HD. There are going to be a few specials, among them: "CNN Presents: Planet in Peril" (October 23 and 24), and "Fed Up: America's Killer Diet" (September 22 and 23).

DirecTV is ramping up its HD capacity after the launch in July of its DirecTV 10 satellite. As just mentioned, CNN-HD is now supposed to be on DirecTV; expect a total of about 70 HD channels sometime around the end of this month. They say they're going to have 100 HD channels in place by the end of the year.

With the launch of a second satellite next year, DirecTV anticipates hitting 150 high-definition channels by mid-2008.

They are also offering HD video-on-demand service.

Comments are in on the FCC's Consumer Education Initiative proposal. A few consumer groups wrote in favor of mandatory education requirements, but the members of the industry's DTV Transition Coalition mounted a full-court press against any required educating.

Comments from the consumer electronics manufacturers association, the retailers association, the cable industry lobby, and several broadcast industry groups all sang the same coordinated song: We have a wonderful comprehensive education campaign planned. We can't tell you what it's going to say or when it's going to start, but if the government mandates any specific education measures, that's going to mess it up. And besides, the government doesn't have the authority to meddle (which is of course an implicit threat of a court challenge).

The industry's comprehensive, coordinated "education" plans seem to be nothing more than a massive marketing and public relations campaign. The goal is not so much to give the consumer objective information about the transition, but rather to control--to limit--what the public hears and when they hear it.

The idea is to channel consumer reactions to the transition in predictable and profitable ways, and to avoid complaints and unhappiness with the TV industry.

They're coordinating so that one industry doesn't step on another's business toes. As they say, a unified message. And they're not anxious to get started.

The Senate's Special Committee on Aging held a hearing on Wednesday that focused on the challenges that America's seniors are likely to have with the DTV transition. It was a relatively short hearing, but surprisingly revealing of the problems we all are facing. Questions from committee members were to the point and showed insight, and the panels of witnesses for the most part candidly revealed shortcomings that must be addressed.

One of the most refreshingly forthright witnesses I've heard at any of these hearings was Mark Goldstein from the General Accountability Office (GAO). When Chairman Kohl (D-Wisconsin) asked if there was effective inter-agency transition coordination, and if there was anyone in charge, Goldstein responded that "There is no one in charge." Further, he said the government had no comprehensive planning effort underway. He added that the NTIA was inherently unsuited to manage the transition education effort, and that while the FCC was most qualified to lead that effort, there was confusion within the Commission as to their responsibilities.

He said no one in the government is trying to assess the risks and problems with the transition education effort, or taking action to mitigate them. He said information at the various government agency DTV web sites often was in conflict, was confusing, and contained gaps.

He suggested that even the people who would not need to take any action at the end of the transition should be educated so that, for example, they would not mistakenly go out and buy a new TV or a converter box they did not need.

I took heart that Goldstein noted that NTIA's converter box subsidy program was not set to distribute coupons on the statutory January 1 date, and that coupons would not be generally available until April. Unfortunately, Senators McCaskill and Smith had not arrived in time to hear that and when McCaskill asked questions of NTIA's Kneuer relating to box availability, he obfuscated rather than tell her directly about the delay.

FCC Commissioner Adelstein, who has been lamenting about the need for consumer education for years, expressed his frustration at the FCC's "lackluster" efforts. He said there was a need within the agency for more coordination, leadership, and priorities. He said it was important for the government to direct the industry's education efforts, as they were motivated by their own self-interests.

Adelstein noted that FCC investigators had discovered vast retailer non-compliance with the Commission's belated analog labeling regulations, and said loads of analog TVs were being dumped on the market. He reported that sales people were often ignorant, and frequently try to sell unsuspecting consumers more than they need or want.

He warned of one of the biggest outrages ever seen -- a "difficult day in history" -- if we don't turn this around. He complained that he didn't know what the industry was doing, that they don't say, that they can change their minds. He said the government maybe can't dictate what they tell consumers, but it would be nice to be able to comment on their planned public service announcements.

NTIA head Kneuer, in high contrast, argued that the government should keep hands-off the industry, that they would conduct their information campaign at the "optimal" time. He seemed to think that the education effort only needed to be directed at people with analog TVs and antennas. He said there was a "danger" in disseminating a uniform message about the transition. The NTIA is charged with promoting U.S. business interests, and is essentially the political telecommunications arm of the White House, so why they're running a consumer program is the mystery of the decade. Perhaps the TV industry lobby wished it?

Senator McCaskill reported that she took a field trip to local electronics stores, and found that the salepeople told her to subscribe to cable or satellite (instead of buying a converter box), and that they did not know anything about the converter boxes or the government's coupon program. She said the TV industry is not motivated to inform people about the boxes, and that the government needs to "force feed" that information to consumers.

McCaskill noted that the cable industry's vaunted $200 million transition education campaign just tells people to buy more cable services and doesn't mention the converter box coupon program.

The U.S. Public Interest Research Group's (PIRG) Amina Fazlullah reported on that organization's undercover investigation into electronics retailer "alarming" practices in the Washington, D.C. area. Sales people and managers at the five stores they visited all provided inaccurate and misleading information (which is consistent with my own forays). They were told the only way to get digital service would be to buy an HDTV or a useless HD tuner (and they were told all digital signals were HD).

Other investigators were not told about the coupon program, or they were told that a new digital TV would cost less than a digital-to-analog converter box. They also reported that sales people in some stores did not know what the analog warning labels were for, and those labels were often displayed incorrectly (for example, under a digital TV).

Committee Chairman Kohl will be introducing legislation that would mandate a national consumer education campaign. Specific requirements would include: mandatory public service announcements (PSAs); easily identifiable labels on coupon-eligible converter boxes to mitigate the potential for "up-selling" and minimize returns; and the establishment of a toll-free phone number to provide individuals with help with determining if their televisions will go dark and installation assistance.

This is all good, but very late.

The audio webcast of the hearing is available on this page.

The House Subcommittee on Telecommunications and the Internet has scheduled two oversight hearings on the approaching nationwide transition to digital television (DTV), the first on October 17 and the other on the 31st.

The first hearing will hear FCC Chairman Kevin Martin, NTIA's Administrator John Kneuer, and a representative from the GAO (hooray!). At the second hearing, the Committee will hear from various "stakeholders" -- i.e. the TV industry and other affected organizations.

I'm hoping for some fireworks at these hearings, as some of the secrets will be out, and I expect there will be some indignant Committee members loaded for bear. The GAO rep will hopefully keep the more politically attuned government witnesses dancing, but I guess they're used to that.

Unfortunately, at this late date I'm not sure what good it will do.

Until next week -- when I'll have a report on the NTIA's DTV Expo (Tuesday) and the FCC's Consumer Education Workshop the following day (no actual consumers will be there).