The Digital Television Transition
July 15, 2005
No. 20

Background: In the 1990s, technologies for broadcasting television signals digitally were developed as a replacement for the analog standard in use since the beginning of TV. DTV (of which high-definition television, or HDTV, is one type) can produce clearer pictures, allow more enhanced features, and are more spectrum-efficient than the analog standard.

In 1997, the FCC adopted plans for a nationwide switch to DTV. Each existing broadcaster was given a new six megahertz block of spectrum to transmit DTV signals. Their old, “analog” spectrum was to be given back after the transition – set at December 31, 2006, provided that 85 percent of households had access to DTV by that time. The old frequencies would then be auctioned off for other uses, such as wireless telephony – potentially garnering tens of billions of dollars.

Status: With less than 1½ years before the 2006 deadline, virtually no one is watching over the air DTV broadcasts. While close to ten percent of households have digital television sets, the content is mostly provided through cable, satellite and DVDs. Only two percent of households have TV’s that can pick up digital broadcasts. The FCC recently voted to require most TV sets sold after March 2006 to have digital tuners, enabling them to receive signals. Congress is preparing legislation to establish a firm date – perhaps 2009 – for the return of these frequencies, regardless of DTV penetration. Some have proposed – to ease the transition – that the federal government finance DTV converter boxes for those consumers who do not have DTV access by that time.

Discussion: It should not be surprising that broadcast DTV is falling flat with consumers. Whatever the advantages of digital technology, broadcast TV is being watched by fewer and fewer Americans. Only some 15 percent of viewers now get their signals over-the-air. And the viewers most likely to want digital service are the ones least likely to watch over the air TV. How may videophiles have rabbit ears on their TVs?

While the federal government should have no role in choosing technological winners and losers, in this case, broadcasters have been given valuable new frequencies for DTV, on the understanding that the existing spectrum be returned. Making this spectrum available for other uses should be the number one goal of policymakers.

Action item: Congress should set a “hard” date by which analog spectrum will be returned, and those frequencies should be auctioned to new licensees as soon as possible, with minimal restrictions on the uses to which it can be put. Ideally, this should be done without any converter box subsidy. If such a subsidy is created, it should be provided on a one-time basis to low-income viewers who can demonstrate they have no subscription service. At the same time, the FCC's rule requiring TV's to have digital tuners should be reconsidered, as it imposes unneeded costs on consumers who do not watch broadcast television.

This brief was prepared by Heritage Research Fellow James L. Gattuso.

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