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Lost FCC Transition Milestones; Coupon Backlog

May 4, 2008

The Hubble photos of deep space tend to lose some of their kick when you shrink them to 130 pixels (the Cone Nebula--it's big). You may have noticed that the DTV transition is also shrinking; in a couple of weeks we'll be down to nine months. Are we ready yet?

There are a couple of important regulatory milestones that seem to have fallen into a black hole. First, when are low-power TV stations going to get their transition deadline? Second, when is the FCC's bi-directional navigation device standard (plug-and-play cable) going to be revealed?

There are no staff drafts on these circulating among the Commissioners waiting for final resolution. No stream of industry lobbyists visiting FCC legal advisers to get their last word in. No chatter in the dockets.

Congress exempted low-power and translator TV stations from the February 17, 2009 analog shutoff, leaving it to the FCC to set a later date. This was done to ease the financial burden on those small stations.

The FCC, and the NTIA, are actually facilitating the voluntary conversion of those stations to digital, but no deadline has been set. (There has been some talk about a three-year delay -- to 2012, but nothing official.)

Late last year the FCC submitted comments on the GAO's November status report on the transition. In those comments, the Commission declared, "The last issue remaining with respect to low power stations is to consider a transition deadline. A draft item is in progress." That was six months ago.

A few pages later --"The Commission will initiate a proceeding to consider the remaining issues for the digital transition of these stations, principally a transition deadline by first quarter 2008."

Well, by my calendar, we're more than a month past then.

The other item will have far reaching impact if and when it ever arrives. The establishment of a universal standard for a bi-directional (interactive) cable interface would mean that cable subscribers in the future (with new compliant TVs) will no longer need a set-top-box, even for premium and advanced cable services. It would be comparable to the arrival of cable-ready analog TVs all those years ago, when you could buy a TV and plug the cable from any system in the U.S. directly into the back of the TV, and it would work.

With the arrival of digital cable, impulse pay-per-view, video-on-demand, switched digital, high-definition, and especially a new cable industry business model, set-top-boxes are back with a vengeance. A new bi-directional navigation device standard would change that; software-based security-codes would be downloaded into your TV (no more CableCARD).

When the FCC proposed a standard back on June 29, 2007, FCC Commissioner Copps said:

"This is a rulemaking that can wait no longer. It has been 11 years since Congress directed the Commission to assure that equipment used to access video programming and other services offered by multi-channel video providers are available to consumers at retail. And yet today consumers cannot walk into their local retailer and purchase a television set that will receive two-way digital cable services like VOD, PPV, and EPGs--as well as other acronyms that haven't been invented yet--without renting a set-top box from their local cable operator."

FCC Chairman Martin optimistically said: "Ideally, we would like consumers to be able to purchase two-way digital cable ready devices at retail by Q4 2008, in time for the final holiday season before the February 17, 2009 over-the-air digital television transition."

Unfortunately, the Commission did not propose a single standard, but instead laid out the competing proposals from the consumer electronics and cable industries. They had been talking at each other for years before that about a voluntary standard, without progress. The FCC even went so far as to require the lobby associations from the two industries (CEA and NCTA) to submit a negotiation progress report every 60 days. Their last--March 28--report said no meetings had been held during the period.

Will the FCC make the hard decisions and lay down a consumer-friendly standard? Will compliant plug-and-play TVs be on the shelves by November? Will the Pentagon give up one of its new nuclear Taliban-fighting attack submarines and use the money instead to give every American household a new 46" HDTV?

I guess we'll find out, sooner or later. Or you could guess :)

So how about the converter box coupon program? The most recent statistics posted by the NTIA are from April 21 (old news), but the coupon web site does give some information about when people can expect to get their coupons based on when they submitted their application.

NTIA has said that once they work through their backlog of requests, processing time should be down to two to three weeks (after application approval), plus standard (not first class) mailing time. I'm not sure why it would have to take three weeks to send the coupons after they have approved the application, but whatever.

I made some charts using their data. The NTIA is mailing out coupons once a week, on Fridays. Once they've cleaned out their backlog, you would expect them to send out coupons for seven days worth of applications. The first chart shows how many days worth of applications they are sending out every Friday. The dates on the bottom axis are the mail-out dates, extending to May 16 (NTIA projections).

So, for example, on May 9 they will send out coupons for 15 days worth of applications.

As you can see, they've mostly been processing a little more than a couple of weeks worth of applications every week, still working on the backlog. (Millions of people applied during January and February when they weren't sending out any coupons.)

The second chart is the number of days for "processing" (delay) before mailing out coupons. Again, the delay is plotted for each mail-out day. The first two mailings were for January 1 and January 2 applications, respectively--each of those days got its own mailing, which were separated by two weeks (giving them time to assess whether refinements needed to be made to their procedures). For later mailings, the delay is a range, depending on when an application was submitted during the window for each mailing.

As you can see, the wait time for coupons is steadily declining. There is now a 5 to 6 week processing delay, plus the time it takes for them to approve an application, plus the time the coupons take in transit -- so about 6 to 7 weeks from the time someone ordered coupons to when they arrive. Better than the 80-day delay for early applicants.

The Sony-Samsung LCD panel manufacturing partnership is planning to add a second line to its 8th generation plant. The cost of the new production capacity is $1.9 billion; it's expected to go online during the second quarter of next year.

Clearly, someone thinks the market for LCD flat-panels is growing.

8th-gen glass is optimized for 46" and 52" HDTVs, but both smaller and larger panels can be cut from the 2.2 x 2.5 meter glass.

A second local station in my area has converted to high-definition local news broadcasts (CBS and now ABC). The NBC affiliate told me "I don't currently have a timeline for our conversion."

Some of the DTV transition messages from broadcasters, while now plentiful, may be misleading. In particular, they are saying that if you use an antenna, you'll probably need a converter box. Hopefully the millions of people who use an antenna and who already own a digital TV will figure out they really don't need a converter box.

Neither have broadcasters figured out how to tell people if they have a digital TV. They're still saying check your owner's manual or call/write the manufacturer with the model number.

If you can select a digital channel, or if you can receive a digital channel, you've got a digital TV. Just let them know what a digital channel number looks like.

I'm assuming that after the transition, the plain channel number (without the suffix, e.g. "-1") will select the primary digital channel. I should probably check to see if the broadcast industry has figured out what to do about that, since they've been slow in fully implementing PSIP (and AFD).

Until next week . . . (no more charts)