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FCC INTRODUCES
PLAN FOR DTV TUNERS
Plan Minimizes Costs and Allows Consumers to Access DTV Signals
Washington, D. C. - Today, the Federal Communications Commission (FCC) adopted a plan that
will give consumers access to digital programming over television by requiring off- air
digital TV (DTV) tuners on nearly all new TV sets by 2007. By enacting a five- year
rollout schedule that starts with larger, more expensive TV sets, the FCC is minimizing
the costs for equipment manufacturers and consumers. This action marks another step in the
FCCs progress toward making the digital television transition a reality. The FCC
said DTV receivers are a necessary element of broadcast television service in the same way
that analog TV receivers have been since the inception of analog television service.
Although analog receivers are still dominant today, that
will change as the transition to digital TV progresses. The FCC said that its jurisdiction
is established by the 1962 All Channel Receiver Act (ACRA), which provides the FCC with
the authority to require that television sets be capable of adequately
receiving all frequencies allocated by the FCC for television
broadcasting.
he authority provided under the ACRA applies to all
devices used to receive broadcast television service, not just those used to receive
analog signals. The FCC said the plan reflects and accounts for the following: - including
DTV reception capability in new television receivers will require the redesign of product
lines, - prices are declining and will decline even faster as economies of scale are
achieved and production efficiencies are realized over time, and - prices of large TV sets
have been declining at a rate of $100 to $800 per year, so the additional cost of the DTV
tuner may be partially or completely offset by the general price decline. The FCC said
this plan will ensure that new TV receivers include a DTV tuner on a schedule as close as
economically feasible to the December 31, 2006, target completion date for the DTV
transition that was set forth in the Communications Act by Congress.
The Second Report and Order and Second Memorandum Opinion
and Order adopted today requires that all television receivers with screen sizes greater
than 13 inches and all television receiving equipment, such as videocassette recorders
(VCRs) and digital versatile disk (DVD) players/ recorders, will be required to include
DTV reception capability after July 1, 2007, according to the following schedule:
Receivers with screen sizes 36 inches and above -- 50% of
a responsible partys units must include DTV tuners effective July 1, 2004; 100% of
such units must include DTV tuners effective July 1, 2005. Receivers with screen sizes 25
to 35 inches -- 50% of a responsible partys units must include DTV tuners effective
July 1, 2005; 100% of such units must include DTV tuners effective July 1, 2006. Receivers
with screen sizes 13 to 24 inches -- 100% of all such units must include DTV tuners
effective July 1, 2007. TV Interface Devices VCRs and DVD players/ recorders, etc. that
receive broadcast television signals -- 100% of all such units must include DTV tuners
effective July 1, 2007. In the item today, the FCC also declined for the time being to
adopt labeling requirements for TV receivers that are not able to receive any over- the-
air broadcast signals.
The FCC stated that it is unclear when, or if, such
products will become commercially available or how they will be marketed. The FCC will
continue to monitor the state of the marketplace and take additional steps if necessary to
protect consumers interests. Todays item also amends the FCC rules to
reference the most recent version of the Advanced Television System Committees
(ATSC) DTV standard.
The FCC also stated that it will address the possible
adoption of the ATSCs Program System and Information Protocol (PSIP)
specification in its forthcoming Second Review of its policies for the DTV transition. In
the interim, the FCC included the PSIP specification in its rules as a document that
licensees may consult for guidance. Finally, todays action denies a petition for
reconsideration requesting that the FCC consider imposing minimum performance thresholds
for DTV receivers. In reaffirming its previous decision on this issue, the FCC said that
competitive forces are the best approach for ensuring that DTV receivers perform
adequately and meet consumer needs in terms of price, quality, performance, and features.
-FCC- MB Docket 00- 39 Action by the Commission, August 8, 2002, by Second Report and
Order and Second Memorandum Opinion and Order (FCC 02- 230).
Chairman Powell, Commissioners Abernathy and Copps, with
Commissioner Martin dissenting and Chairman Powell, Commissioners Abernathy, Copps and
Martin issuing statements. Office of Engineering and Technology contact: Alan Stillwell,
Associate Chief, (202) 418- 2925 News about the Federal Communications Commission can also
be found on the Commission's web site www. fcc. gov. 2 Aug 8, 10:39 AM (ET)
SEPARATE STATEMENT OF CHAIRMAN
MICHAEL K. POWELL
In the Matter of Review of the Commissions Rules and
Policies Affecting the Conversion to Digital Television MM Docket No. 00- 39 Every
year, 25 million analog sets are sold in this country, their purchasers blissfully unaware
that their new sets come with a government- mandated expiration date. Someday, analog
broadcasting will cease. When that time comes, consumers will expect their television sets
to go on working in the digital world just as they do today. This includes the ability to
receive broadcast signals. Indeed, the expectation that TV sets receive broadcast signals
is so ingrained that consumers simply assume this functionality is incorporated into their
television set. That is what todays Order is all about.
There are approximately 81 million television sets in the
U. S. (over 30% of the total) that are not connected to any subscription video service and
rely solely on free, over- the- air broadcasting. Of those sets that rely on over- the-
air service, about 46.5 million are in broadcast- only homes and 34.5 million are in homes
that subscribe to a multichannel video programming service. Thus, over- the- air tuners
affect tens of millions of consumers.
The Consumer Electronics Association ( CEA or
Trade Association) has been vehemently opposed to phasing in DTV tuners in
television sets. The Trade Association argues that those who want to watch over- the- air
digital broadcasting should be required to purchase an external set- top box. This would
be a far more expensive proposition for consumers, given that these boxes currently cost
about $500. It is incredible that CEA supports an alternative that would cost consumers
150% more than CEAs own cost projections for the DTV tuner ($ 500 for the set top
box vs. $200 for the tuner). If the Trade Associations concern about the cost of
integrated tuners is sincere, one wonders why they would suggest a solution that would
cost consumers more than twice as much. Moreover, this is the same group that insists in
other contexts -- e. g., the need for plug and play sets that consumers
do not want a set- top box and will not tolerate such an inconvenience. It is odd that
they can be so solicitous of consumer expectations in one context and so tone deaf to them
here. Furthermore, CEAs claim that a tuner requirement would be an unreasonable
burden on television manufacturers is refuted by the willingness of Thomson and Zenith to
voluntarily incorporate DTV tuners on a phased- in basis. In fact, Thomson is the leading
television and digital satellite receiver manufacturer in the United States selling each
year more than 4 million televisions and 2 million digital satellite receivers. It strains
credulity to believe that either of these companies would voluntarily agree to a course of
action likely to result in the consequences suggested by the Trade Association.
I applaud Zenith and Thompson for their commitment to the
DTV transition. 1 We recognize that a DTV tuner will initially add costs, but CEAs
exclusive focus on this incremental cost ignores the critical functionality the tuner adds
to the TV set. This Order simply gives consumers what they receive today when they buy a
box with pictures that claims to be a TV set. The tuner is what makes that box a
television set. A true TV may cost a small amount more than a monitor, but the consumer is
getting much more capability. Imagine tuning in to an emergency broadcast of an impending
hurricane on an HDTV monitor. What is that worth to consumers? Furthermore, we are
confident that economies and efficiencies of scale will drive these costs down. Historical
trends demonstrate this fact, which CEA inexplicably ignores. Ironically, CEA, in its
opposition to the 1962 All Channel Receiver Act, claimed the UHF requirement would
increase the cost of television sets by 14%. In fact, set prices actually declined
following passage of the legislation. Price sensitivity led us to phase in the tuner
requirement over a five year period. Initially it will only apply to the largest sets,
where the price impact would be the lowest. In fact, the prices of these large sets have
been declining at a rate of $100 to $800 per year, so the additional cost of the DTV tuner
may be partially or completely offset by the general price decline.
most projections are within a general range, from
about the same as an analog tuner by the time a requirement would apply to
small- screen TVs (Zenith), to $16 by 2006 (Arthur D. Little), to $50 by 2006 (Motorola),
to $75 by 2007- 2008 (Thomson). CEA, by contrast, declares that DTV tuners will retain a
$200 premium for the foreseeable future. Although a precise estimate of future
cost is difficult, it is not difficult to discern which projections are within a zone of
reasonableness and which is hyperbole. Ultimately, the DTV transition will shift into high
gear when three factors come together: (1) a critical mass of compelling digital content;
(2) distribution of that content to consumers; and (3) reception equipment in
consumers hands. We have been working on these issues through our voluntary call to
action and through Commission proceedings such as the broadcast copy protection NPRM we
initiate today.
Todays decision promotes the availability of
reception equipment, without which the first two factors are meaningless. We readily admit
that there are additional steps to take, such as the development of plug and
play sets for those cable subscribers who do not want to use a set- top box. But
simply because there is more work to be done does not mean that we should defer the
progress we can make today. In the end, we have to make a judgment about what is in
consumers best interest; not in a vacuum, not in a hypothetical marketplace, but in
the real world. The All Channel Receiver Act and the DTV transition are national
commitments in which the FCC must play a prominent role. I support todays action. 2
SEPARATE STATEMENT OF COMMISSIONER KATHLEEN Q.
ABERNATHY
Re: Review of the Commissions Rules and Policies Affecting the Conversion to Digital
Television, MM Docket No. 00- 39 (adopted August 8, 2002) Todays decision is a
difficult balancing act between the need to continue to promote the DTV transition and a
desire to protect consumers from excessive price increases for television sets. In
addition, our decision involves significant regulatory intervention in the marketplace,
something that I generally do not
advocate because it can distort competition and drive up prices for consumers.
Nevertheless, I support this decision for the following reasons: 1) the transition from
analog to digital television is statutorily mandated and is not driven by market forces;
2) without the mass availability of television sets that can receive over- the air digital
signals the transition remains stalled; 3) the phase-out of analog only television sets
from the market gives consumers access to digital broadcast signals during the transition
and protects consumers from disruption of service at the end of the transition; and 4)
consumers necessarily will face additional costs as a result of the transition and it is
our job to mitigate those costs to the extent possible.
The transition to digital has never been a marketplace transition, but one mandated by
Congress. Congress set a target date of December 31, 2006 for the return of the spectrum
used by broadcasters for their analog channel, unless 85% of homes in a market cannot
receive local digital broadcast television signals. Until such time, the spectrum that is
currently used for analog channels cannot be made available for public safety and other
wireless uses. Yet, I dont
believe we will reach 85% of homes if analog only sets continue to be introduced into the
market and television sets that can receive over- the- air digital signals are not widely
available. Fewer than 16% of the DTV ready receivers sold in 2001 had the capability to
receive over- the- air digital signals (through a set- top box or an integrated tuner).
This represents only 0.2% of
television households. There also has been little support from the consumer electronics
industry as a whole for a voluntary inclusion of DTV tuners in television sets. Thus,
market forces alone are not providing consumers with access to digital signals and it is
therefore appropriate and indeed necessary at this time for the Commission to step in.
Moreover, consumers expect to receive over- the- air signals on the television sets that
they purchase whether it is the receipt of digital signals during the transition,
or the receipt of any broadcast signal after the transition is over. Adopting a tuner
requirement will ensure that consumer expectations are met and will limit the number of
new sets being purchased today that will become obsolete at the end of the transition.
Despite the increasing proliferation of
cable television and direct broadcast satellite service, a significant number of American
households continue to rely on over- the- air transmissions as their sole source of
television programming. Even households subscribing to a MVPD frequently rely on over-
the- air transmissions on one or more of their receivers. In fact, over 30% of television
sets in the U. S. (81 million) are not connected to any MVPD service and receive all
broadcast signals over- the-
air. Furthermore, unless cable and DBS carriage of digital broadcast signals increases
significantly, a digital tuner may be the only access an MVPD household has to many
digital broadcast services during the transition. I recognize that consumers necessarily
will face additional costs as a result of the transition and it is our job to mitigate
those costs to the extent possible. I believe that the five year phase in approach adopted
by the Commission today
will mitigate such concerns and drive down the costs of digital television equipment more
quickly. The incremental costs in the larger sets at the earlier stages will make up a
relatively small portion of the price of the set. Market efficiencies will drive the price
of tuners down so that by the time tuners are required for smaller television sets, the
costs will have greatly decreased. Furthermore, the price of digital television sets
has been declining steadily
(according to one consumer electronics manufacturer, at a rate of approximately
$100 to $800 per year for the large screen sets), which could offset any increased costs
associated with inclusion of a DTV tuner. Imposing a tuner mandate also will ensure that
consumer electronic manufacturers can compete on a level playing field such that the cost
structure will be the same for all, and the increased volumes will drive down the costs
for the benefit of all.
Today, we are taking a step forward in the digital transition, but it is one of many steps
that must be taken. The Commission also has been considering copyright, plug and
play cable compatibility, and must- carry issues. I do not believe, however, that we
should be at a standstill until all these issues are resolved at once. Such inaction now
will only serve to delay the
transition, rather than act as a catalyst for advancing the transition. I also am pleased
that we will address inclusion of PSIP as a mandatory part of the standard in the next DTV
periodic review. I am particularly concerned about whether PSIP is necessary for the use
of V- chip technology and I look forward to continuing the dialogue on this issue. |
SEPARATE STATEMENT OF COMMISSIONER MICHAEL J. COPPS
Re: In the Matter of Review of the Commissions Rules and
Policies Affecting the Conversion To Digital Television, MB Docket No. 00- 39
This second item of the day reiterates the commitment of this Commission to accelerate the
countrys transition to digital television. I support the item because I believe it
is a necessary step toward realizing our statutory obligations with regard to DTV.
Let me say at the outset that I am altogether aware of the concern that has been expressed
over the initial impact a DTV tuner requirement could have on consumer prices. Far from
turning a blind eye to valid consumer concerns by supporting this item, I believe that the
action that we take today will make DTV sets affordable for all consumers more quickly
than would be possible without todays Commission action. History indicates, and some
of the major manufacturers agree, that the costs of incorporating DTV tuners into
televisions set should fall fairly rapidly as all sets include these tuners. In
addition, the five year phase- in schedule does not require the smallest and least
expensive sets to include tuners until 2007, by which time the cost of this technology
will no doubt be dramatically reduced. So the phased- in requirement we adopt today,
rather than increasing the costs of sets, should
significantly reduce the costs of DTV technology, which we hope and expect will ameliorate
what might otherwise be significant consumer sticker shock. Additionally,
those of us who purchase new sets between now and 2007 wont have to go out right
after 2007, when these relatively new receivers are still performing well, and buy another
set in order to receive digital programming. That would be sticker shock, too.
There is no question that DTV is the wave of the future: Congress has mandated the return
of analog spectrum and the transition to digital broadcasting; this Commission and its
Chairman are committed to moving the transition forward; and there are already some 400
stations across the country broadcasting digital signals. But the high price and scarcity
of DTV- capable receivers that are on the market now are not consistent with realizing the
Congressional goal of transitioning to digital television at such time as 85% of homes
have digital reception capability. Each time a consumer purchases an analog-only set, we
move further from reaching that 85% and further away from the Congressional objective. The
acknowledgement by some manufacturers that a DTV tuner phase-in requirement such as the
one established in the Order is reasonable and doable is a great boon to our efforts here.
In addition, the rolling phase- in requirement provides manufacturers with the flexibility
to reach the goal post on a faster schedule. Although manufacturers will not be required
to fully
complete the phase- in until 2007, there is nothing to prevent them from taking advantage
of manufacturing, technological, or other advances that might arise over the course of the
schedule that would allow manufacturers to incorporate DTV tuners into more sets sooner. 1
The bottom line is that we must get the DTV transition back on track. I believe this Order
is a good step in the right direction. Finally, I wish to emphasize that this Order is by
no means the end of the process. With some 70% of U. S. households subscribing to cable
television services, we must quickly address cable compatibility issues for the digital
transition to succeed. Ideally a solution on those issues would track the time- frames
established in todays Order. Consumers deserve, and must have, that kind of
certainty. I understand that, from technical standpoint, this may be a bit farther from
resolution than the digital broadcast tuner. But I hope the players can speed up
their progress on the cable compatibility
issues, and I look forward to working with my colleagues, the industry, and all
interested stakeholders to resolve.
DISSENTING STATEMENT OFCOMMISSIONER KEVIN J. MARTIN
Re: Review of the Commissions Rules and Policies
Affecting the Conversion To Digital Television, Second Report and Order and Second
Memorandum Opinion and Order, MM Docket No. 00- 39, Adopted August 8, 2002 First, I
commend the Chairman for bringing this tough issue to a vote. As I have said previously, I
believe it is extremely important for the Commission to resolve outstanding DTV- related
issues quickly so that affected industries and consumers know the rules of the road. While
I believe the costs of this isolated proposal outweigh the benefits, as I explain below, I
appreciate that with every DTV- related decision this Commission makes, we further clarify
those rules of the road. Indeed, I would have gone farther. I firmly believe that such
clarity is what is needed to spur the digital transition, and I encourage the Commission
to continue to actively resolve outstanding issues.
Generally, I prefer market- based forces to government regulation, and I am particularly
cautious when regulation imposes a cost to consumers or requires consumers to purchase a
product they may not use. In such situations, I believe the better course of action
usually is to refrain from regulation and instead to provide consumers with a choice. If
government intervention is necessary, however, I believe it must be clear that the
benefits outweigh the costs.
Currently, consumers can choose whether to spend the extra money to purchase a television
that includes a digital tuner. This Order sets out deadlines by when television
manufacturers must include digital tuners, so that all but the smallest televisions will
be able to receive digital broadcast signals over the air. Today, however, few
consumers receive their video programming only through over the air broadcasting. Instead,
the vast majority of consumers receive broadcast programming through their cable or
satellite provider. Even as the
transition to digital is made, these consumers will probably prefer to continue to receive
their video programming through cable or satellite. Thus, taking action on digital
broadcast tuners alone, as we do to today, confers a real benefit only on the relatively
small percentage of consumers (approximately fifteen percent) who do not rely on cable or
satellite for broadcast reception. The costs, however, will be borne by every
consumer who buys a television. I
therefore fear that the costs of this requirement, as an isolated action, exceed the
benefits, and I am not persuaded that it is the right step. On the other hand, if we were
to resolve the digital cable and broadcast tuner issues together, we would create a
significantly greater benefit for consumers with relatively little additional cost. It is
my understanding that manufacturers can integrate digital broadcast and cable reception
capabilities, thereby
incorporating these functions into televisions for approximately the same cost as the
digital broadcast tuner alone. The value of being able to view digital programming,
however, would accrue not just to consumers who rely on over- the- air broadcast, but to
the approximately 70 percent of consumers who access their programming (including
broadcast) via cable. Indeed, many of those consumers would have additional savings as
they would no longer need to rent a set- top or converter box. Thus, if we
were to ensure equipment functionality and interoperability for all digital cable
systems by requiring the cable industry to adopt a single standard, then manufacturers
could build digital cable ready sets that also incorporate broadcast tuners.
This action would impose approximately the same cost on consumers as the Order does today,
yet would enable significantly more consumers to receive more digital programming. And if
we were also to resolve outstanding cable carriage issues, we could further increase the
amount of digital broadcast programming these consumers could
access. I nevertheless am hopeful that, in addition to concluding this proceeding today,
we will resolve outstanding issues relating to cable carriage and cable compatibility in
the very near future. I believe that such steps will facilitate and accelerate this
countrys transition to digital television.
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