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Congressional Transition Hearings, Etc.

October 21, 2007

Interesting week past.

On Monday the TV industry's Digital TV Transition Coalition finally unveiled their long awaited transition marketing campaign, and all we got was long on hype and short on specifics. The same could be said for the DTV transition hearings held on Wednesday in both the House and Senate. As Minnesota's Senator Amy Klobuchar observed, all we're seeing is foam--we need some beer. More evidence of transition anarchy came out in the hearings, prompting numerous expressions of "concern" by committee members, especially with respect to the converter box coupon program.

Amy Klobuchar

One of my local TV stations is WRAL in Raleigh, NC--the first commerical station in the country to start transmitting a digital signal, and the first station to convert its local news operation to high-definition. They had aired a transition PSA recently that was essentially a teaser, offering so little information as to be confusing for the uninitiated. In the last week, however, they aired a new, more helpful one.

The FCC has prepared a new consumer advisory on DTV digital-to-analog converter boxes and closed captioning. It's an idealized report--a deaf and hard-of-hearing advocate at one of the Congressional hearings said it was unresponsive to their concerns about closed captioning via digital TV. Hopefully the issues will be resolved within the next year.

Dan Ramer at has published an interesting "small analysis" of high definition video quality on disc. Worth a read.

And now, more on the industry marketing campaign and the two Congressional hearings:

Last week broadcasters announced that their DTV transition marketing campaign will be worth $697 million, including $327 million in "sacrificed ads." That is supposed to mean the air time used for public service announcements about the transition could be converted to paid advertisements worth that much money (assuming there is a line of advertisers waiting for time).

According to some reports, the full $697 million also includes lost revenue for airing news stories on the transition (think how much money they could have made by selling ads instead of reporting on the Iraq war!). These news program reports will be aired primarily in the last 100 days prior to the end of the transition, so we'll have to wait for more than a year to see them.

Not included in the pile of Monopoly cash might be transition information worked into the story lines of regular entertainment programming. No details provided.

Broadcast executives also refused to answer questions about how many public service announcements would be aired during prime time.

They did say that 939 broadcast stations had signed on to the program. That's just a little more than half the total of 1800-plus full-power TV stations in the country.

But assuming all the stations in the country air these transition plugs over a period of fifteen months, that works out to about $12,000 per month per station in "sacrificed ads." Not a lot in TV-land.

The FCC is preparing to issue its final rule on mandated consumer education measures. In his prepared opening statement at the House hearing on Wednesday, FCC Chairman Kevin Martin said:

"I have circulated a proposal to my colleagues that requires broadcasters to use PSAs and screen crawls throughout the day to inform viewers about the transition and to publicly report on these education efforts on a quarterly basis. The item also requires MVPDs to provide monthly inserts about the DTV transition in their customer billing statements. The item also requires manufacturers of television receivers and related devices to provide notice to consumers of the transition's impact on that equipment."

The FCC has scheduled its monthly open meeting for October 31, although the agenda has not yet been announced. Hopefully the consumer education rule will be presented and adopted at that meeting.

The House Subcommittee on Telecommunications and the Internet (Ed Markey, Chairman) held the first hearing on Wednesday.

Government witnesses were FCC Chairman Martin, NTIA head Kneuer, and GAO DTV expert Mark Goldstein (investigating the transition for Congress). A second panel of witnesses included representatives from four public interest groups and the IBM guy administering the converter box program.

Markey opened by noting that prior hearings had been fuzzy (i.e. witness testimony was vague), and annointed FCC Chairman Martin as the nation's DTV quarterback. (Much of the hearing centered on the lack of leadership behind the transition.)

Ed Markey

In their opening statements, business-friendly Republicans said they thought the industry would do a great job educating the public--they trusted "the market." Democrats were more concerned about the fate of consumers.

The question and answer period brought out more concerns but elicited not much hard information. The NTIA's Kneuer was particularly adept at responding to questions without answering them.

Greg Walden (Oregon Republican) asked Kneuer how long it would take for consumers to get their coupons, once they had requested them. Perhaps he was getting the feeling that while Congress mandated that consumers could request coupons beginning January 1 (2008), they might not be getting them any time soon after that. Kneuer launched into his usual tortured explanation that they planned to track the availability of boxes and participating retailers by location and would not send out coupons if boxes were not available near the consumer.

Walden suggested that might be frustrating for the consumer and noted that he lived in a small town but might want to drive a ways to Portland to pick up his converter box. Kneuer said they would "make adjustments" and suggested that they did not expect a large volume of requests in the early part of the program (probably because they would not begin advertising the need for converter boxes and the availability of coupons until April).

But suppose people want to order their box over the internet (like me)? Are they going to refuse to send me a coupon if local brick-and-mortar stores don't have boxes? Ah, that's where Kneuer's fiction falls apart.

Walden then asked Kneuer when manufacturers were telling him they would be shipping boxes to stores. Kneuer said that information was business proprietary, and added that they were working with retailers, but then conceded that they had not yet certified any retailers to participate in the converter box program.

Anna Eshoo (Democrat from California) asked Kneuer about education campaign messages--what are they? Kneuer would only say they were being market tested now. She asked about the many different messages he said were needed, contrasted to the single message the GAO said was needed -- do they have a metric for measuring the effectiveness of the messages? Kneuer responded by saying consumers have lots of choices, and said they would be making measurements -- they were working with their public/private partnership -- the industry would be doing polling -- lots of different participants working together.

If this doesn't make any sense, it's why Markey described past hearing testimony as fuzzy.

In response to other questions, Kneuer said they would be synching consumer education with the availability of the converter boxes.

The full Senate Commerce Committee had their hearing Wednesday afternoon. NTIA's Kneuer was there. Commissioner Adelstein was the FCC witness. A second panel of witnesses included representatives from broadcasters (NAB), from the cable industry (NCTA), from the satellite industry (DirecTV), from public television, and from the Consumer Electronics Retailers Coalition.

The issue of nobody being in charge of the transition came up first. Commissioner Adelstein argued for a single manager, but as a Democrat in a Republican-controlled Federal Communications Commission (i.e. Chairman Kevin Martin), he has not been in a position to set FCC priorities. He lamented that the FCC just disbanded its own digital TV task force. He echoed GAO's Goldstein is saying there was no plan.

Kneuer said he didn't think anyone needed to be in charge (taking the TV industry's position). He said there was a "potential downside" to having a single entity leading. He thought transition progress was wonderful.

And then along came Senator Claire McCaskill (Missouri Democrat). On transition leadership, she alluded to Harry Truman's "the buck stops here" statement.

She said "I have this horrible feeling the buck's not going to stop anywhere in this deal, because we're not going to put anyone in charge, and then when it goes badly, everybody does this." She illustrated by pointing in two directions--everybody blaming the other guy.

"Somebody needs to decide who's going to own the buck, because someone has to be held accountable."

Claire McCaskill

With that, she asked Kneuer (again) when coupons were going to be available.

Kneuer: "Consumers can request coupons on January 1, 2008."

McCaskill: "That wasn't my question. When will coupons be available?"

Kneuer: "When a consumer requests a coupon on January 1, 2008, we will process that coupon, and we will deliver it to them," (he paused but then continued after McCaskill started to speak) "[inaudible] when we deliver the coupon, we've got systems in place so that coupons are getting made available in locations where there are boxes available and retailers participating, so the coupon will be delivered with a list of eligible converter boxes, and a list of available retailers by location. If on January 1, 2008, there is a gap, because the coupons expire in 90 days, ah, we won't deliver them until we have ah, ah, visibility of access of boxes and retailers in that community."

John Kneuer

McCaskill was clearly unhappy with that obtuse answer, mostly because she had discovered a copy of NTIA's contract with IBM for managing the converter box program. She read him language from that contract that stated that IBM would begin distributing coupons on April 1.

Kneuer was rendered speechless for long seconds, looking like a kid caught with his hand in the cookie jar. An assistant jumped up and placed a playbook in front of them and they conferred, and then Kneuer offered an implausible explanation about other language that said IBM would distribute coupons earlier if NTIA directed so. Kneuer then exclaimed he was directing them to distribute coupons on January 1--this notwithstanding that the request for proposals for the contract (issued last March) specified that coupon distribution would start April 1, and the fact that as a result of the tardy contract award, no retailers will be ready to participate in the program by January 1.

Getting Assistance

McCaskill was having none of it. She continued to skewer Kneuer's credibility, even as he continued to refuse to admit the obvious truth. As a parting question, she asked how many retailers he had certified. A: None.

The second industry panel didn't have much more to add.

The DirecTV rep said they would have a half-hour program on the transition running on a continuous loop on their customer service channel, beginning in April.

The Consumer Electronics Retailer Coalition rep said WalMart, RadioShack, Best Buy, and Circuit City had all announced that they would participate in the converter box program. None have yet been certified, and none have announced when they will start selling the boxes. Apparently they have been meeting with NTIA, but NTIA has yet to show them a copy of the contract they will have to sign, enumerating their obligations.

Committee members asked for a copy of that contract when it becomes available.

The National Association of Broadcasters said they are considering paying for airplane flyovers with transition messages -- little airplanes pulling banners through the air. Committee members seemed not to take that seriously.

There seemed to be agreement on the committee that they still had no idea when anything would happen.

And there seems to be a question of whether these hearings are accomplishing anything other than to shed some light on the mess the transition is in. As Mark Goldstein from the Government Accountability Office noted: there are problems with retailers giving consumers incorrect and misleading information, and problems with broadcasters' facilities preparations for the transition, and there is no single government plan for the transition.

But what is Congress doing with the information it collects at these hearings? Are they for show? Do we seriously expect to see any new legislation emerging at this late date? The narrowly drawn transition legislation we now have was put together two years ago, and they've not since filled in any of the gaps.

The Chair and Co-chair of the Senate Commerce Committee are 80-something, as is the Chairman of the full House Energy and Commerce Committee. All have exhibited signs of mental decline, with confused questions and comments. Where is the leadership?

Or perhaps we're all expected to muddle through this transition by ourselves, as best we can.

Until next week . . . (nothing on my calendar yet).