Since the days of
Ed Sullivan and Milton Berle, television has been broadcast using
the same technology and largely over the same frequencies. That is
about to change. Later this month, Congress will vote on setting a
firm date, likely in 2009, when TV broadcasters will have to end
their analog broadcasts and return the frequencies used for them.
Afterward, all TV broadcasts will use digital television (DTV)
technologies. This transition is critical-not so much for
television viewers, few of whom watch television over the air
anyway, but for consumers of innovative new wireless services that
can put the old TV spectrum to better use.
While the final
proposal has not yet been circulated, the Senate Commerce Committee
may vote on the DTV transition next week, in order to allow some
$10 billion in spectrum auction revenues to be included in budget
The House Commerce Committee will likely vote the following week.
In addition to setting a transition date, lawmakers will also
consider subsidies for over-the-air viewers who don't own DTV sets.
Subsidies, however, are unnecessary and should be rejected.
Additionally, broadcasters are urging lawmakers to force cable
television providers to carry each of the multiple digital channels
that the broadcasters may air. This too should be rejected, as it
runs contrary to First Amendment principles and may constitute an
unjustified taking of private property.
A Snail's Pace
Efforts to improve
television signals began in earnest in the 1980s. Initially, the
focus was on improving picture definition with high-definition (HD)
technology. However, these early efforts were overtaken by the
advent of digital technology. Digital broadcasting brings with it
many new features. For instance, viewers watching a sports event
could call up instant replays or change camera angles at the touch
of a button, or they could obtain further information on a program,
much like with recent DVDs. Digital compression also allows
broadcasters to transmit several channels of programming over
spectrum that previously could carry only one.
In 1997, the FCC,
as directed by Congress, established a plan for the transition to
DTV. Each existing broadcaster received a new six-megahertz block
of spectrum to transmit DTV signals. They would have to return
their old, "analog" spectrum after the transition-set to occur on
December 31, 2006, provided that 85 percent of households had
access to DTV by that time. The old frequencies would then be
auctioned off, potentially raising billions of dollars, and put to
other uses, such as wireless telephony.
The net effect of
this plan was to grant existing broadcasters use of two huge blocks
of spectrum, free of charge. This giveaway raised quite a few
eyebrows because elsewhere the FCC was auctioning the use of
valuable spectrum to the highest bidders.
Aside from the billions in lost government revenue, the plan left
broadcasters with little incentive to return their old
Since that time,
the digital transition has proceeded at a snail's pace. With less
than one-and-a-half years to go before the 2006 deadline, almost no
one is watching over-the-air DTV broadcasts. While close to ten
percent of households have digital television sets, the content
mostly comes through cable, satellite, and DVDs. Only two percent
of households own TV sets that can receive digital broadcasts.
It should not be
surprising that broadcast DTV is falling flat. Whatever the
advantages of digital technology, fewer and fewer Americans are
watching broadcast TV. Only some 15 percent of viewers receive
terrestrial TV signals. 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?
consumers' lukewarm reception of digital broadcasting should not
concern policymakers. Government should have no role in determining
technological winners and losers. Whether viewers are unimpressed
with DTV or choose to receive it via cable rather than broadcast,
policymakers should not try to impose their own preferences.
The transition to
DTV nevertheless is critical, but for a different reason: the old
TV frequencies are extremely valuable and can be used to provide
innovative new wireless services, from expanded smart-phone
services to wireless Internet connections. Until the transition is
made, however, this valuable electromagnetic real estate will be
The Budget Bill
The real cost of
inaction, then, is not forgone government income, but the lost
benefits to consumers and to the economy if this spectrum remains
locked up. Procedurally, however, the issue is being driven in
Congress by the budget. Both the Senate and House Commerce
committees plan to recommend DTV legislation for inclusion in
budget reconciliation. Each committee is expected to set a new
deadline-likely January 1, 2009-for the end of analog broadcasts.
This new date would not be conditioned, as is the current 2006
deadline, on the percentage of viewers with DTV access.
"hard" deadline is critical. But there are a number of other
important issues that lawmakers also need to addressed.
- Subsidies for
analog-only viewers. Many have proposed that the federal
government finance DTV converter boxes for consumers who do not
have DTV access by the transition deadline. While the vast majority
of Americans would not be affected by the transition (either
because they already have DTV sets or they subscribe to cable or
satellite TV), some will lose their signals on transition day. To
ease the transition, some would have the federal government
subsidize set-top converter boxes that enable old television sets
to receive digital signals. The cost of such a program would depend
on its details; estimates range from several hundred million to
several billion dollars.
The idea has immense political appeal. Lawmakers fear the wrath of
angry viewers who are unable to tune into their favorite shows.
Ultimately, however, providing subsidies is the wrong thing to do.
There is no federal entitlement to analog television. To the
contrary, viewers have been on notice of this change for nearly a
decade, and there is no reason for those who are prepared for it to
subsidize those who are not.
If a subsidy program is nonetheless adopted, it should be strictly
limited. It should be provided on a one-time basis to low-income
viewers-and only to those who do not subscribe to cable or
"must-carry" rules. Another key issue facing lawmakers is
whether to require cable television providers to carry every DTV
signal transmitted by broadcasters. For years, federal "must-carry"
rules have forced cable television firms to include local broadcast
television channels on their systems.
Now broadcasters want to require cable firms to carry
multiple channels from each broadcaster. Because DTV allows
broadcasters to sub-divide their frequencies, they can provide
several channels within a standard frequency allotment. Many
broadcasters are taking advantage of this new capability. For
instance, NBC transmits a second channel of programming called
"WeatherPlus" to its affiliates, and CBS just announced that it
will launch a new channel to be called "CBS.2." This channel,
according to one CBS executive, will provide programming "that
either complements or counterprograms, frankly, the mother ship."
This additional programming may be valuable to viewers, but who
decides whether it is more valuable than the many other channels
seeking a spot on cable systems? There is simply no reason to give
a channel a guaranteed slot, by government mandate, just because it
is provided by a company that also holds a broadcast license.
"Must carry" rules raise troubling constitutional issues as well.
First, forcing cable firms to transmit specific channels designated
by the government violates the principles of the First Amendment. A
rule forcing newspapers to carry articles by specific individuals
or corporations, for instance, would be quickly struck down as a
violation of the right to free speech. The same principle should
apply to television programming.
Second, the regulation may be a "taking" of property under the
Fifth Amendment and thus forbidden unless compensation is paid.
Space on a cable system's line-up is not a public resource; it was
created by private owners and remains privately-owned today.
Regulation that gives someone else the use of this resource is a
taking, just as if it were land or a building.
In Kelo v. City of New London, the Supreme Court upheld the
taking of land for the use of private firms. The decision met with
widespread outrage among the public and among many in Congress who
saw the decision as weakening property rights. It would be ironic
if, in the same year, Congress itself triggered a similar taking.
Further, if "must carry" is a taking, the compensation the
government would have to pay could easily run into the billions,
offsetting the revenues the government would receive from
auctioning off the old broadcast spectrum.
After years of
delay, Congress may soon vote to complete the transition to digital
television. This is a good thing, but not for the reasons usually
offered. Washington should be neutral on broadcasting technology,
as with any other industry. The real issue here is the valuable
spectrum that was given to broadcasters in the 1990s, on the
understanding that their old frequencies be returned. Retrieving
this spectrum and making it available for other uses should be
policymakers' main goal. Congress should set a "hard" date by which
old spectrum will be relinquished. This should be done with few or
no consumer subsidies and without any new mandates.
James L. Gattuso is
Research Fellow in Regulatory Policy in the Thomas A. Roe Institute
for Economic Policy Studies at the Heritage Foundation.