Oral Statement of Robert K. Graves
on behalf of
The Digital HDTV Grand Alliance
Before the
Commerce Committee
Subcommittee on Telecommunications and Finance
United States House of Representatives
March 21, 1996
Good morning. My name is Robert Graves and I represent
the digital HDTV Grand Alliance-AT&T, General Instrument,
MIT, Philips, Sarnoff, Thomson, and Zenith-the partners
who developed the digital high-definition television
system underlying the advanced television (ATV) standard
recommended to the FCC by its Advisory Committee. I
also serve as Chairman of the Advanced Television Systems
Committee, a group of more than fifty entities developing
standards for digital television.
I'd like to discuss a great technological achievement--digital
high-definition television-offering theater-like, widescreen
images and 6-channel CD-quality sound, as well as a
fundamental improvement in the National Information
Infrastructure. Over the last decade, a unique combination
of consistent, bipartisan leadership from the Congress
and the FCC--and a half-billion dollar private sector
investment--has yielded the best digital television
technology by far in the world. Our plea today is that
government not forsake this superb plan right when
it's about to pay off for the American people.
Before addressing spectrum auctions, let me summarize
several key points. First, broadcasters must offer
HDTV to remain competitive. Broadcasters understand
this and plan to make S)TV the primary use of the ATV
channel. Second, consumers want the dramatically improved
performance HDTV offers. Third, besides dazzling pictures
and stunning sound, HDTV will give consumers a high-resolution
display and a huge data "pipe" that can deliver
a host of other information services, and rapid penetration
of entertainment HDTV will lower costs for HDTV applications
in education, medicine, business, and national defense.
And finally, capitalizing on this American technological
triumph will create and preserve tens of thousands
of highly skilled jobs and engender economic growth.
An early pivotal FCC decision has driven this successful
effort--the simulcast approach whereby existing broadcasters
would borrow a second channel to begin transmitting
ATV signals while continuing to provide analog TV on
their existing frequencies. This meant pulling a rabbit
out of a hat--inventing technology to use the taboo
channels already allocated to television, but unusable
because of interference--providing a practical means
for upgrading to digital television without disenfranchising
the owners of 200 million analog TVs. It's a loan,
not a giveaway.
Generally, using auctions to assign spectrum to competing
applicants is a good idea. But auctioning these "loaner"
channels is a bad idea that would render broadcast
ATV stillborn, undermine free over-the-air television,
lock in spectrum inefficiencies, and grossly reduce
auction proceeds.
In the first place, any sensible discussion of up-front
auctions must assume that the channels would be used
for television or other data broadcast services using
the proposed ATV standard, because these slivers of
spectrum can only be used efficiently for one-way broadcast
applications, and even inefficient other uses would
require years of additional development and testing.
Such auctions would yield far less than the inflated
estimates often repeated.
But even so, up-front auctions don't make sense. Would
small, local broadcasters even bid? Do we want large
outside corporations to supplant today's local broadcasters-just
because they have more money?
And what about the future of free TV? If these channels
are auctioned, digital television, especially HDTV,
will develop as a geographically spotty, premium pay
service rather than the ubiquitous advertiser-supported
service Americans enjoy today. Free, local, over-the-air
TV is vital to our cultural and political fabric, and
we should not give it up.
Even just for budget balancing, up-front auctions don't
make sense. After analog transmissions cease, the digital
channels can be repacked much more tightly, yielding
huge blocks of unencumbered, nationwide spectrum that
will be far more valuable than the small, noncontiguous
taboo channels, bringing perhaps ten times more than
up-front auctions.
And auctioning the taboo channels now would mean never
getting the analog channels back, and locking in grossly
inefficient spectrum use for decades.
Finally, up-front auctions would delay HDTV generally,
and render it stillborn for free over-the-air TV. This
would throw away America's technological lead, threaten
jobs and global competitiveness, and thwart the delivery
of valuable services.
Rather than up-front auctions, Congress and the FCC
should hasten the conversion to AT; recap the AT channels
once analog transmissions cease; organize the recovered
spectrum into large, nationwide blocks; and assign
the recovered spectrum using auctions. Such a course
will enable free over-the-air television to compete,
will vastly improve spectrum efficiency, and will maximize
the proceeds from auctions.
Unlike up-front auctions, proposals for an "early
give-back" of the analog channels have some merit.
They offer many of the same advantages as our recommended
approach, however, the stated time periods are too
ambitious, especially for broadcasters in smaller markets.
We're in the home stretch of an international digital
video horse race with a three-length lead, with proven
digital technology that has leap-forged efforts in
Japan and Europe. But at this late stage, second-guessing
of the FCC's well-conceived plan gravely threatens
our success-second-guessing by some members of Congress,
and quite frankly, by Chairman Hundt--alone among the
five commissioners and alone among the four FCC Chairmen
who have led this unparalleled bipartisan effort over
nearly a decade.
As more members of Congress become fully informed, we're
confident that Congress and the Commission will follow
through to win this race. We urge Congress to reiterate
its support for the FCC plan upon which we've relied,
and to direct the Commission expeditiously to adopt
an AT standard and issue AT licenses to broadcasters
in order to capture the benefits of this fertile technology
for the American people. It would be tragically misguided
and patently unfair, and would set a damaging precedent
if the government were to jerk the rug out from under
this splendid American success story
Thank you.
SUMMARY
The Grand Alliance implores Congress and the Federal
Communications Commission to do everything possible
to promote the rapid implementation of free over-the-air
high-definition television (HDTV) and other digital
Advanced Television (ATV) services. Specifically, Congress
should reiterate its support for the plan the Commission
and its Advisory Committee have pursued for almost
a decade, including temporarily lending existing broadcasters
a second 6 MHz channel during a transition period while
the nation's consumers and broadcasters make the conversion
to digital television. Congress should encourage the
Commission to implement this ingenious plan as quickly
as possible.
During the last eight years, through a unique combination
of government leadership and private investment and
competition, the U. S. has developed and thoroughly
tested what is by far the world's best digital television
system, dramatically leap-frogging earlier efforts
in Japan and Europe to develop high-definition television.
After investing half a billion dollars, with no government
funding, U. S . industry now stands ready to deploy
this fertile technology, giving not only breathtaking
improvements in the video and audio quality of entertainment
and news television, but also upgrading the nation's
information infrastructure to enable the economical
delivery of a host of useful information-age services
that will help address pressing needs in education,
health care, and other areas.
For many months now, dozens of U. S. manufacturing firms
offering broadcast equipment, consumer electronics
equipment, and integrated circuits have been poised
to make the final investments in converting proven
prototype technology into competitive commercial products.
Capitalizing on this American technological triumph
will create and preserve tens of thousands of high-skill,
high-wage jobs, engendering substantial economic growth
while improving the quality of life for Americans across
all economic strata. At this crucial stage, Congress
must reiterate its support for the FCC plan, providing
the clear and consistent policy that is required to
galvanize industry to make the further investments
required to capitalize on the commanding U. S. technological
lead. In stark contrast to what is needed, proposals
in the Congress to auction the spectrum reserved for
the conversion to ATV have put industry investment
plans on hold and threaten to scuttle the conversion
to digital television and to throw away the technological
advantage and the potential for economic development
that government and industry have fought so hard to
achieve. Second-guessing the FCC's well-conceived plan
at this late stage is causing significant delay and
tremendous uncertainty, and these are anathema to potential
investors in this new technology.
Rather than auction the ATV spectrum, a far better course
would be 1) to do everything possible to hasten the
conversion to digital television, 2) to repack the
ATV channels more tightly once today's analog transmissions
cease, and 3) to organize the recovered television
spectrum into large, contiguous nationwide blocks that
could support a wide variety of innovative wireless
services. Such reorganized spectrum could be assigned
using auctions, and would be far more valuable than
the small, non contiguous slices of television spectrum
to be used for the conversion to digital broadcast
television. Such a course will enable free over-the-air
television to compete in the years and decades to come,
will vastly improve the efficiency of television spectrum
use, will maximize the proceeds from spectrum auctions,
and will create jobs and engender economic growth.
Good morning, Mr. Chairman and members of the Subcommittee.
My name is Robert Graves and I am a technology and
policy consultant representing the members of the digital
HDTV Grand Alliance--AT&T, General Instrument,
MIT, Philips Electronics, the David Sarnoff Research
Center, Thomson Consumer Electronics, and Zenith Electronics--the
partners who have worked together under the direction
of the FCC's Advisory Committee on Advanced Television
Service to develop the digital high-definition television
system that is the basis of a new advanced television
(AIV) standard the Advisory Committee has recommended
to the Commission. I also serve as Chairman of the
Advanced Television Systems Committee, an industry
group of more than fifty corporations, associations
and research institutions developing standards for
digital television.
I'd like to speak today about one of our nation's greatest
technological achievements-the development of all-digital
high-definition television, offering pristine, theater-like,
widescreen images and 6-channel CD-quality surround
sound, and a whole lot more--a fundamental improvement
in the National Information Infrastructure (NII) that
can soon become widely available to all Americans.
This achievement would never have been possible without
a unique combination of consistent, bipartisan leadership
from the Congress and the FCC, and private investment
in a process that used first competition and later
cooperation to yield by far the best digital television
technology in the world--with proven performance that
surpassed even the lofty expectations of its developers.
Our plea today is that the Congress and the FCC see
this ingenious plan through the last stages to a successful
conclusion. Don't forsake this superb plan right when
it's about to pay off for the American people.
In 1987, when the FCC began the process of defining
an HDTV transmission standard, the United States was
nowhere compared to Japan and Europe where decade-long,
government-funded efforts were poised to deliver analog
HDTV. However, with strong support from Congress and
visionary leadership from the FCC and from former FCC
Chairman Richard Wiley who was asked to lead the Commission's
Advisory Committee, by 1993 the U.S. had leap-frogged
over Japan and Europe into a preeminent position in
the development of all-digital HDTV. From an original
field of 23 different system proposals, the Advisory
Committee selected four all-digital systems as finalists,
and with encouragement from the Advisory Committee
and the Commission, the proponents of these systems
formed the Grand Alliance, agreeing to develop a single
digital system that combined the best features of each
competing system.
Although the Advisory Committee raised the performance
bar substantially in specifying the requirements for
the combined system, the Grand Alliance built a world-leading
prototype system that cleared the bar with room to
spare in exhaustive laboratory and field tests conducted
last year. Given this stellar performance, last November
the Advisory Committee recommended an ATV standard
to the Commission based on the Grand Alliance system.
Although no government funding was involved, this stunning
collective achievement did not come free. Dozens of
companies invested upwards of $500 million and devoted
the best efforts of hundreds of volunteers in the Advisory
Cornmittee process over almost a decade. The Grand
Alliance members alone have invested approximately
$300 million and some of their best engineering talent--at
the expense of other opportunities--to get to this
point.
An early pivotal decision by the Commission formed the
basis for this successful effort. This was the simulcast
approach whereby existing broadcasters would be given
the temporary use of a second 6 MHz television channel
to begin transmitting ATV signals while continuing
to provide today's analog television transmissions
on their existing frequencies. This was something of
a rabbit out of a hat, because the extra channels to
be used are the so-called taboo channels, channels
like Channel 8 in Washington that are already allocated
to television service, but can't be used for analog
TV because of interference considerations. Digital
transmission technology, however, produces signals
that are much more resistant to noise and interference.
One of the "miracles" of this technology
is that digital television signals can be transmitted
in these otherwise unusable channels and provide much
higher resolution pictures (five times as much picture
information) with an equal or better coverage area
than analog television, using just one-sixteenth of
the power at the transmitter. Thus, the Commission's
simulcast decision gives broadcasters a practical means
for making the transition to digital television without
disenfranchising the owners of approximately 200 million
analog television sets. The simulcast plan is an ingenious
transition plan, not a "spectrum giveaway."
Another "miracle" of this technology is the
tremendous flexibility that comes along for the ride
in deploying a digital HDTV transmission system. The
system uses a packetized data transport system with
packet headers that identify the type of data that
each packet carries. This means that in addition to
HDTV, the transmission system can carry three or four
simultaneous programs of standard-definition television
(SDTV) at other times of the day, or numerous audio
programs, software, stock quotes, sports scores, weather
reports or a host of other potential information services
(but not two-way services such as mobile radio communications).
Thus, when consumers invest in HDTV they'll get dazzling
pictures, stunning sound and a whole lot more. They'll
get a high resolution display and a huge "piper
into their homes whereby each TV channel could deliver
19 million bits of data per second--a speed about 1,000
times faster than today's typical computer modem. Their
investment in entertainment television will provide
an economical means for delivering information services
that will address pressing needs in health care, education
and other areas.
The Grand Alliance HDTV system puts the U. S. way out
in front in the race to develop digital video technology--a
key technology that will enable innovative multimedia
applications beyond entertainment, including applications
in education and training, medicine, business communications,
and national defense. Getting a lead in broadcast entertainment
and news is important, because the high volume production
associated with consumer electronics will lower the
costs for these other uses of HDTV.
No one is more excited than the Grand Alliance about
the opportunities for flexible use of the ATV transmission
system. Attached to this testimony are materials filed
with the FCC that describe in greater detail the benefits
that such flexible use by broadcasters can provide.
But these materials also thoroughly explain our belief
that the centerpiece application of the ATV channel
will be and ought to be high-definition television.
We're convinced that in the not too distant future,
entertainment and news television will be viewed predominantly
in HDTV. It will be just as unusual then to watch prime
television programs in standard definition television
as it would be to watch them in black-and-white today.
The only real question is whether government policies
will provide local, free over-the-air broadcasters
an ability to upgrade their service to HDTV, or whether
local broadcasters will have fallen by the wayside,
unable to compete with technically superior HDTV services
offered over cable, telephone and satellite facilities.
We believe that broadcasters must be able to offer HDTV
if they are to remain competitive with other delivery
media in the years and decades to come. This means
lending each broadcaster a full 6 Liz channel during
the transition period, because HDTV cannot be provided
with anything less. And we believe that sticking with
the FCC's long-standing plan--as reinforced in the
new telecommunications act--to limit initial eligibility
for these transition channels to existing broadcasters
is the best course for preserving free, over-the-air
television, for promoting the most rapid possible conversion
to digital television, for using scarce spectrum resources
most efficiently, and for maximizing the revenues that
could flow to the US. Treasury from potential auctions
of spectrum.
Two misconceptions have been heard frequently over the
past few months regarding HDTV: first, that broadcasters
have no interest in providing HDTV; and second, that
consumers have no great desire for higher-resolution
pictures. Neither of these ideas could be further from
the truth. As shown in the attached documents filed
with the FCC, the vast majority of broadcasters recognize
that HDTV is essential to their survival and they plan
to make HDTV the centerpiece application provided over
the digital television channel. The attachments also
describe consumer research demonstrating conclusively
that consumers who have actually seen HDTV are prepared
to pay a substantial premium, if necessary, for the
dramatically improved performance it offers, and that
substantial early sales will provide the volumes required
to drive costs and consumer prices down rapidly. We've
shown HDTV to thousands of people, and almost without
exception they only want to know how soon they can
buy a high-definition set. The members of the Grand
Alliance, and many other firms in the industry, have
already bet hundreds of millions and are prepared to
invest many hundreds of millions more on our belief
that HDTV will be a resounding success in the marketplace.
Regarding proposals to auction the ATV conversion channels,
we recognize that the electromagnetic spectrum is an
extremely valuable natural resource that belongs to
the citizens of this country. And we believe that using
auctions to assign spectrum to competing applicants
is, generally speaking, a good idea. But auctioning
these "loaner" channels planned for the conversion
to digital TV is a bad idea--a bad public policy that
would render broadcast ATV stillborn, undermine the
ability of free over-the-air television to compete
technically in the decades to come, lock in an inefficient
usage of scarce spectrum, and grossly reduce the funds
that ultimately could flow to the Treasury by auctioning
recaptured television spectrum at the end of the transition.
In the first place, most of the discussion surrounding
such auctions, and most of the wildly inflated estimates
of its value, mistakenly assume that this spectrum
can readily be used for almost any purpose. In fact,
this spectrum is substantially encumbered by the need
to protect surrounding analog television signals from
interference. The "miracle" of shoe-horning
in 1,600 additional TV channels only works for a low-power,
digital, one-way, point-to-multipoint service where
the digital and analog transmitters can be more or
less co-located. This spectrum is not well-suited for
two-way mobile communications, the application most
frequently associated with the incredible estimates
of its auction value. Indeed, without years of additional
development and testing that would still result in
a much less efficient use of these channels, these
slivers of spectrum interspersed among existing analog
television channels can only be used for one-way, digital,
point-to-multipoint broadcast applications using portions
of the Advisory Committee's proposed ATV standard or
something very smaller.
So any sensible discussion of up-front auctions should
assume that the channels would be used for television
broadcasts or other data broadcast services using the
proposed ATV standard, and the proceeds of such auctions
would be far less than the inflated estimates commonly
repeated. But even so, up-front auctions just don't
make sense. Who would bid? The small, local broadcaster?
Or does Congress want telephone companies or other
large outside corporations to come in and outbid and
supplant today's local broadcasters-just because they
have more money?
And what about the future of "free" advertiser-supported
TV? If these channels are auctioned, can we expect
free TV? With auctions, digital television, especially
HDTV, would develop as a geographically spotty, premium
pay service rather than the ubiquitous, free service
that Americans enjoy today. Free over-the-air TV is
important to the cultural fabric of America, including
our democratic political processes--both for the 35%
of households who rely directly upon it and for the
65% who watch it predominantly even when it's carried
over subscription services like cable. We should not
give it up.
Even if Congress' only concern were maximizing the proceeds
from spectrum auctions in order to help balance the
budget, up-front auctions wouldn't make sense. After
today's analog TV transmissions cease, the digital
channels can be repacked much more tightly, leaving
perhaps as much as 150 or even 200 MHz of recaptured
spectrum that can be organized into large, nationwide
contiguous blocks that could be used for a wide variety
of wireless services, including two-way mobile radio
services. This huge amount of unencumbered spectrum
would be far more valuable than the small, non contiguous
slices of ATV transition spectrum, and would yield
far more--perhaps ten times more--than up-front auctions
of today's taboo channels. Is our government so shortsighted
that it can't see the value of a 10-times appreciation
over ten years?
And auctioning the taboo channels now would mean never
getting the analog channels back. It's one thing to
reclaim one channel after lending existing broadcasters
a second channel in order to enable a practical upgrade
of their service, and quite another to confiscate their
licenses, even if they're already withering away with
an outmoded analog service. Up-front auctions would
mean forgoing a unique opportunity to put in place
a vastly more efficient TV spectrum plan and would
lock in a grossly inefficient use of this scarce resource
for decades to come.
And finally, up-front auctions, or even the continued
threat of up-front auctions, would delay the introduction
of HDTV generally, and render it stillborn for ubiquitous
free over-the-air TV. This would squander the US. technological
lead, eliminate jobs and reduce global competitiveness,
and thwart the delivery of valuable services to consumers.
The apparent willingness of some government policy
makers to throw this all away is tremendously frustrating
to those of us involved in developing the standard
over the last decade.
Rather than up-front auctions of the ATV spectrum, Congress
and the FCC should 1) do everything possible to hasten
the conversion to digital television; 2) repack the
ATV channels more tightly once today's analog transmissions
cease; 3) organize the recovered television spectrum
into large, contiguous nationwide blocks that could
support a wide variety of innovative wireless services;
and 4) assign the recovered, reorganized spectrum to
competing applicants using auctions. Such a course
will enable free over-the-air television to compete
in the years and decades to come, will vastly improve
the efficiency of television spectrum use, will maximize
the funds that can flow to the Treasury from spectrum
auctions, and will create and preserve jobs and engender
economic growth.
Unlike proposals for up-front auctions, proposals for
an "early give-back" of the analog channels
have some merit. As with our recommended approach,
in principle they would allow for a practical, but
expeditious conversion to digital television, would
greatly improve television's use of scarce spectrum
resources, and would maximize the proceeds from auctions
of recovered spectrum. However, the specific time periods
recommended are too ambitious, especially for broadcasters
in smaller markets.
In the attached documents filed with the FCC, the Grand
Alliance argued that the current 15 year transition
period included as part of the FCC plan can be reduced
to twelve or even ten years. We also urged the FCC
to set a nominal target date for the cessation of analog
TV broadcasts, to evaluate progress along the way,
and then to fix a final end of the transition period
with three years advance notice of the final date for
consumers and broadcasters. Proposals to auction channels
after seven years with the spectrum actually relinquished
after ten years appear on their face to be consistent
with this time frame, however, they overlook several
important factors.
First of all, the specific dates of 2002 and 2005 are
not appropriate, because it's already 1996 and the
standard has not yet been accepted by the FCC nor licenses
assigned to broadcasters.
Moreover, the current FCC plan allows six years for
broadcasters to apply for ATV licenses and to construct
digital facilities. The ten-year transition period
cannot begin until the standard is formally adopted,
licenses are assigned, facilities are constructed,
and ATV transmissions commence. Although we believe
that most broadcasters will be able to be on the air
with digital service in much less than six years, the
smallest broadcasters may need that much time. Thus,
although auctions of prospective recovered spectrum
in theory could be held at any time, the earliest actual
availability of the spectrum would probably be 2008
in the largest markets and up to five years later in
the smaller markets, assuming that the proposed standard
is adopted by the FCC and ATV licenses are assigned
to existing broadcasters before the end of this year.
Although we believe the FCC can do much to promote a
rapid transition and we're convinced that consumers
will flock to digital television, especially HDTV,
the ability to cease analog broadcasts will depend
on the extent to which consumers who still rely exclusively
on over-the-air broadcast television have invested
in digital televisions or at least in converters that
will allow them to view digital signals on their old
analog TVs. In light of these uncertainties, we encourage
Congress not to legislate a date certain for the return
of analog TV frequencies, but rather to direct the
FCC to do everything possible to hasten the conversion,
and to authorize the Commission to assign recovered
spectrum using auctions, on a market-by-market basis,
if appropriate, including auctions prior to the actual
availability of the spectrum.
In conclusion, our nation is now in the home stretch
of an international digital video horse race with a
three-length lead, with proven all-digital HDTV technology
in hand that has leap-frogged earlier efforts in Japan
and Europe--technology that will deliver quantum improvements
in entertainment television and a host of other valuable
services, while creating jobs and engendering economic
growth. The fundamental government and industry planning
are long since done, the pioneering technical work
completed. And now with the finish line in sight, some
government leaders have stopped the race while they
debate the various virtuous contributions to society
that horses can make. At this late stage, second-guessing
of the FCC's well-conceived plan threatens to scuttle
the whole process and throw away these hard-won benefits.
Second-guessing by some members and even leaders of
Congress, and quite frankly, by Chairman Hundt himself--alone
among the five commissioners and alone among the four
FCC Chairmen who have led this unparalleled bipartisan
effort over nearly a decade--is causing significant
delay and tremendous uncertainty, and these are anathema
to potential investors in this new technology.
The Grand Alliance is confident that as more members
of Congress fully understand this situation, Congress
and the Commission will indeed show the will to win
this race. We urge Congress to reiterate its support
for the FCC plan upon which industry has relied over
the last decade; and to direct the Commission to adopt
an ATV standard, to issue ATV licenses to broadcasters,
and to otherwise implement its ATV plan as expeditiously
as possible in order to bring the benefits of this
fertile technology to the American people. It would
be tragically misguided and patently unfair, and would
set a damaging precedent if the government were to
jerk the rug out from under this splendid American
success story.
The Millennium Project
