CES panelists mull DTV readiness, possible delay

Politicos in Washington are clearly split over Barack Obama's call to postpone the Digital TV transition slated for February 17, and here at the Consumer Electronics Show in Las Vegas (read all our CES 2009 coverage), opinions are equally divided. Panelists at a CES session on the transition voiced some serious doubts about the country's readiness for the scheduled cessation of analog broadcast next month—but had equally strong reservations about the feasibility of putting it off.

Bigger problems than coupons

Transition worries have centered on the government coupon program, meant to subsidize digital conversion boxes for those with older television sets who rely on over-the-air (OtA) broadcast signals—an estimated 17 million households. With funds for the $40 coupons running behind demand, there's already a burgeoning waiting list—a problem Emily Neilson, president and general manager of local station KLAS-TV, attributes to a political refusal to means test the problem. Many, she says, have requested the maximum two coupons per household because they could, rather than because they needed it.

But that also means that the funding shortfall may be less severe than it appears. Only about half of the coupons issued have been redeemed to date, and it's not clear how many of those will ultimately be converted. Lynn Mento, senior vice president for membership at the American Association of Retired Persons, said that the over-50 crowd is—perhaps surprisingly—transitioning at rates comparable to the population at large. Among those who haven't yet transitioned, she says, about 20 percent say they won't, "either because it's not important to them or because they can't afford to because of the economy."

Then there are... other reasons for opting out. "We did a lot of man on the street issues in Wilmington," explained Alan Miles, VP for media and telecommunications research with Barclays Capital. In the South Carolina city that recently served as a canary in the analog-free coal mine, he says "a lot of people were vehemently angry about this big-brotherish program." Many the company spoke to apparently wondered: "What are they going to do with that box when it's in my house?"

Among those who can afford it—and don't fear the spies inside their TVs—some who've requested coupons may ultimately opt to subscribe to pay satellite or cable services in lieu of purchasing a broadcast converter. "If it's true that digital signal reception is an issue, and it certainly is, a lot of households would have no choice but to subscribe to cable, and that could mean an enormous land grab by cable," said Miles. Though subscribership rates aren't showing much evidence of such a shift yet, says Miles, any such trend may be "lost in the noise" of a turbulent economy.

But what are these "digital signal reception" issues of which you speak? Neilson said that her station's live crews, which rely on over-the-air to monitor their broadcasts, have experienced trouble receiving their own signal in rocky Nevada. That's because of the so-called "cliff problem": Interference may degrade an analog signal while leaving it viewable, if fuzzy. Digital signals, however, are more likely to drop off a "cliff," from clear picture to blue screen of death. Henry Hauser, a project manager with Panasonic, called the cliff effect a "big issue"—and worried consumers would blame their expensive new television sets for the problem.

The cliffs aren't restricted to Nevada, though—Hauser noted that the New York area was likely to face similar difficulties. Miles argues that Wilmington "should have been an easy market for the transition because it's very flat and very small," with a lower proportion of residents relying on OtA than in the country as a whole. Yet viewers phoned in with a flurry of complaints, and Miles projected that if those numbers were extrapolated nationwide, the first week of the transition could see millions of such calls. "FCC and other agencies have just denied that there's an antenna issue until very recently," said Miles, who claimed his company's interviews with Wilmingtonians suggested half of those transitioning to over-the-air digital would need "something more than just a box."

That notion sparked sharp disagreement from Alan Stillwell of the FCC's Office of Engineering and Technology, who was watching from the audience. He blamed the troubles on a combination of consumer confusion about how to set up their antennas or boxes, and in particular on station WECT-TV, which "dropped their antenna height by half and moved closer to Wilmington." But Neilson, who is equally convinced that "it's not going to be as easy as plugging in a converter box and all is well," sprang to Miles' defense, saying complaint calls to her own station belied the FCC's confidence.

She also highlighted the problem of small, low power stations that will continue to broadcast on analog when their larger cousins have gone all-digital. Many of the converter boxes on the market aren't equipped with a receiver for analog passthrough, and many of the consumers trudging out to the store with their coupons in hand may not know to ask for it.

To delay or not to delay, that is the question

You might think these concerns put Neilson squarely in the camp of those pushing for a delay, but she argues that the difficulties associated with putting off the transition would be at least as great. She noted that especially for smaller stations, the costs of running two simultaneous transmitters—including monthly bills for power alone running into the thousands of dollars—were a significant burden. Moreover, broadcasters had adjusted their programming schedules to accommodate the transition, pushing back the traditional February ratings "sweeps" that drive advertising decisions. "Everything is going to be about May now," she said. "If it gets delayed, what is Nielsen going to do?" Whenever the deadline is set, she argued, there will be particular regional problems that can't be predicted in advance: Better to push ahead, leaving a single "nightlight" analog station in each area broadcasting transition information and emergency announcements.

Panasonic's Hauser agreed. "We've been regulated to be compliant, so we're ready," he said. "We feel it would be better just to end the confusion. People who are going to delay are going to delay until you turn it off and they don't get a picture."

Brian Dietz, vice president for the National Cable & Telecommunications Association, expressed diplomatic indifference: "If it's February 17th, we're fine with that. If they want to push it back, we're fine with that too. We'll continue to support it whenever the date is." He did note, however, that NCTA has been approached by the incoming Obama administration to help assemble a national call center to deal with any transitional glitches.

It was the AARP's Mento who voiced the clearest support for a delay, noting that her organization has seen an uptick in calls from members as February draws near. "We think it would be good to have the time to create a contingency plan," she said, "because I don't think anyone believes we have a truly effective contingency plan for the transition date." She also saw some value in having the transition occur in the spring or summer, given the potential antenna issues: "We don't like our members up on roofs in wintry months."