HDTV NEWS: The transition appears to some commentators be stalled. That may or may not be an case. How do you see it?
MR. OSTROFF: It is fair to say that the transition has slowed to a crawl. From my perspective that is not a surprise. You cannot force technological change on a marketplace if there is no economic basis for that change. The introduction of digital television in the costume of HDTV was a fundamental blunder that has to work its way through the system.
Is it a fatal blunder or one of timing or pacing?
MR. OSTROFF: It was a fundamental blunder that has to work its way through the system because reality always has a way of eventually asserting itself. I think we have reality in the process of asserting itself. That is why things are slowed to a crawl while reality begins to emerge.
There are reports, Nat, that the so-called HDTV-ready devices are "flying off the shelves." The Circuit City and Good Guys stores I have visited recently say as much as 25% of their big screen sales are HDTV-ready monitors. Most people are using DvDs for the signal source and decoder sales being far shorter. What does that tell you about the market, if anything.
MR. OSTROFF: I think it is foolishness. There were 25 million sets sold last year. How many of those were HDTV-ready? A tiny, tiny fraction. The consumer electronics industry's attempt to spin the events as a vast up-take of HDTV-ready product is foolishness. In fact, the 25 million receivers that have flown out the back and front doors of these stores are building an enormous hurdle or road block to the eventual adoption of a universal digital service. So, in its continued pursuit of its own interests the consumer electronics industry is creating the reasons why digital television will not be rapidly assimilated in the marketplace.
This seems to be independent of modulation schemes which you have been most focused upon. This view is regardless of modulation schemes?
MR. OSTROFF: That is correct. From our point of view there is more than one issue .The first issue we raised and got smacked for (by Congress) had nothing to do with the modulation system. As you recall, it was Sinclair's position that multi-channel use of digital television was a far more reasonable application of DTV than using HDTV in a single channel. Senator John McCain (R-AZ) saw fit to smack us, and Preston Padden (then vice-president at ABC) around for (saying) that Multi-channel use is an accepted approach today.
The modulation scheme itself comes into the picture, if you will pardon the pun, because no matter what application you make of digital television, if it can't be received in a consumer-friendly fashion, there is then no business. If there is no business, there is no incentive for capital to be expended in building infrastructure.
Do you think it was a complete mistake for choosing broadcasting as the pioneering signal provider for advanced television services. Might not have been DBS or cable a better choice?
MR. OSTROFF: No, I think the television spectrum and infrastructure that is in place for analog was/is the ideal launching pad for a 21st century wide-band digital broadcast service. The mistake that was made was to apply mid-20th century thinking to a 21st century application. Television is not merely delivering entertainment to the living room. That was 1965.
In the year 2000 television can be called tele-data-vision. It is everything that a wide-band broadcast should be, which happens to include entertainment. But it also includes a lot of other things that the wireless industry is sticking its toe into, but does not have the bandwidth to really provide, that is wireless internet, wireless data delivery, and music and entertainment...and whatever else can be conjured up in the mind of the next 15 year old who wants to be Bill Gates. That is what tele-data-vision should be, and not be constructed by the very narrow image of view of what is effectively the consumer electronics industry.
Is the business of broadcasting a good business as it stands?
MR. OSTROFF: Oh, broadcasting is a good business! It is one of the best businesses in the world. Look at the media companies and what they have done with the gross margins they have made on the entertainment television side of the business.
Why is then this excellent business thought passé, or at least needing this augmentation from data? Why is it a good business today but not a good one tomorrow? What causes that shift?
MR. OSTROFF: There are a number of reasons. If you have a digital delivery service you need to look at all of the applications that can be used and implemented with that data stream. It would be equivalent of Western Union with its telegraph service telling Alexander Grahm Bell, "Who needs to hear voices over wires? The telegraph services works just fine." In fact, they did just that.
Now, to say you have a digital delivery service the only thing it should be used for is (for) entertainment high-definition images is the same foolish narrow vision. Only this time it is with the consumer electronics guys who make big margins with big screen sets. That is what they wanted to do. The consumer electronics industry has done a great disservice to the American public by propagating this idea that the only thing television is is HDTV.
This hurts them, Nat. Manufacturers were not the initiators of any of the H/DTV movement. Japan broadcasting (NHK) first started it and showed up in America with it to spark an interest in securing enough bandwidth and a standard from the FCC to insure their competitive position should someone else go into HDTV with a winning hand. With a standard and spectrum they would be ready to react to this potential competitor. Later Al Sikes, then Chairman of the FCC, along with broadcasters, devised a "use it (spectrum) or lose it" policy in order to keep that needed spectrum out of the hands of competitors. Just to have it assigned without consideration for use was not enough to bar other petitioners who would come to want it.
The manufacturers contribution to making the standard was to insure that it was thought through cost-wise. They also needed to know it was going to be a business if they were to spend their own money for the development. They viewed the FCC as the "trigger" and time setter. I believe that manufacturers look at what came out as doing the best they could under the circumstances. They thought sincerely that HDTV was the only product that had enough differentiation to cause this transition to move. These data services were simply unknown and uninvited businesses at that time with no demand representation in the marketplace. I hear them asking, "How could we make a product that had no demand?"
MR. OSTROFF: I feel sorry for those guys. There are a lot of people who came by and got nailed by what became the Interment. They missed the opportunity and they didn't understand the rapid change in consumer purchasing and time-use patterns. The CEA people have been victimized by it too. But that is no reason to continue down that path. The Internet in 1995 and applications for it....who would have envisaged MP3 audio services and streaming video services? Of course, the CEA folks missed the straws in the wind, but that is no reason to continue now that the straws have turned into bails of hay, and you are getting buried by continuing down a path that has proven to be a waste of time.
What blueprint is showing up now from you, from the ATSC, from dialogs on forums that looks like the guiding light for consumer electronics?
MR. OSTROFF: I wish I could answer that.
We now hear them (CEA members) saying, "Well, after all, this is a broadcast standard and we are willing to adapt and do what we need to do."
MR. OSTROFF: Well, that's right! Like I said earlier, reason and reality will always emerge...sometimes after the Christians get eaten by the lions, But it always emerges. Broadcasters have said, and Sinclair led the charge a year or so ago, that you have to be able to receive the digital signal in a portable environment with a simple antenna. Why is that? Because everybody is becoming addicted to a wireless world. To tie a broadcaster to an outdoor antenna with a feed line was absurdity in 1995. It is insanity in 2000.
When you get to the realization that portability is important, simple antenna reception is important...if we can satisfy those needs, then the door is open to really utilizing the television signal for all of the things it can be used for.
Are these diverse services yet to be invented? Or are they on the drawing boards now and looking pretty good?
MR. OSTROFF: They is an embryonic activity, There is, for example, a company like Wave Express (www.waveexpress.com) who has developed a means for transactional activity on a one-way broadcast basis. This is very interesting. There are companies developing targeted public services--public safety services, services to large corporations where information is disseminated to large groups of targeted people who are not in their offices or on the road, traveling, or out selling. There are lots of people thinking about that. The problem they always bump their head up against is, "Well, if I cant receive it on the equivalent of a Palm Pilot in my suit pocket, then I don't have a business." That is where the need for addressing the (modulation) standard really came from. "We have to have access to that market."
So, the environment has changed. The criteria has changed. So we need to make an adjustment. There are two ways to make that adjustment. 1) re-invent 8-VSB and make it backward compatible so we can keep on going without interruption. 2) we must have an interruption and introduce a new system and move it through procedures.
MR. OSTROFF: I argue that your second approach is not valid. There is no reason to interrupt anything by adding an option to transmit a different standard.
In FCC Reply Comments and other statements made by many in the industry a delay of two, three, four, or more years is inevitable. New innovative ideas can come streaming in during any time the standard is "open" for reconsideration by the FCC. Technology moves on and it is highly predictable that someone is going to introduce something that gives rise to long debate. Isn't that something apt to cause a delay? Or are there streamlined methods in place today at the FCC that would allow you to make an inclusion without opening the standard?
MR. OSTROFF: The people who talk about introducing a delay obviously are not in touch with reality. There is (already) a delay. That is because there are increasingly large numbers or broadcasters who say, "I am not putting capital into something that doesn't work." You either have to recognize that you (already) have a delay resolved by a fix for it, you can at least quantify how you get out of this morass we are in. If you continue to beat on, " We have got to stay the course, we have got to stay the course, got to stay the course" H/DTV will grind to a halt with an undetermined delay. That is caused by the reality of economics which will far exceed any delay that might be introduced because there might be some minor confusion about which standard is being broadcast.
What kind of a delay is believable if making the inclusion of the COFDM choice you have asked for?
MR. OSTROFF: If the process went down in any kind of a legitimate way there would be an announcement from the ATSC that they are opening negotiations with the DVB-T (a European developed standard) to include it as part of the ATSC. If that seem unreasonable an organization like MSTV (a Washington, DC based technical watchdog for broadcasters) and NAB at the conclusion of this new testing phase will discover that the differences between 8-VSB and DVB-T are so glaring and sharp that broadcasters must have it, and you get a petition going to the FCC signed by the majority of broadcast licensees in the United States requesting them to start a rule making to adopt DVB-T as an alternate standard. This is basically the same kind of petition that Sinclair put together, but now signed not by 300 people, but perhaps a 1000 TV stations. That petition would include information showing that the arguments about receivability are not correct. That the arguments about interference are not correct because they will be a scientifically accepted, statistically significant set of data developed by MSTV and NAB that support that.
If that happens, the Commission could institute a 'rule making,' and the Commission (FCC) could move on it quickly because it is the broadcast licensees--their licensees asking for it. So, maybe that process can happen in six months. So, its a year from now before a DVB-T standard is authorized in the United States.
I would argue first of all that if a year ago this process had been done by the Commission on behalf of the Sinclair petition, which was submitted on or about this time last year, we would be so far down that road today that a question of delay would not exist. The inaction of the Commission and the continuation of staying the course has clearly fed the morass and delay we find ourselves in today. If ATSC thinks and puts forward changes in the 8-VSB standard along with such things as backward compatibility...I will simply point out, Dale, that it is a five year process to get changes to a standard because of a process that exist inside ATSC.
There are people who will argue that any introduction of DVB-T will be no less contentious and cause the same time delay.
MR. OSTROFF: No, if you accept DVB-T as it is standardized on an international basis (you won't have a time delay.)
Supposing someone introduces some superiority in another system or element? Innovation goes on all the time.
MR. OSTROFF: Innovation does not manifest itself in a completed, operating, and internationally accepted standard overnight. You would have to say that if there is another standard (and there is not another standard. The Japanese ISDB standard is still well outside an internationally accepted, completely defined commercially implemented standard.) There is only one other. Why should we not have the option to chose one of the other? If we don't, we are in the same situation we were in analog. We paid the price for having invented television, but we always had an inferior quality analog service compared to the European PAL version. We got there first and got stuck with the technology that was created to be first. We should not have to replicate that mistake again.
What could be an obstruction to introduce a delay?
MR. OSTROFF: I don't know, but I have a couple of comments. One, the issue has been made perfectly clear by the FCC that if you have to change the table of allotments (the spectrum plan) there is going to be a big problem. It is very important that if a DVB-T standard were to be put forward in a unified fashion by the broadcast community, part of the showing would have to be that the table changes would be minimal.
Does the FCC have a clear method for making this inclusion if the ATSC makes that inclusion in the standard?
MR. OSTROFF: It seems to me that this whole process does not require the ATSC to do anything, The ATSC is not anything other than a standard setting body. They are not the absolute word. You don't need them to bless anything.
They do codify it, however, in a kind of important packaging sense?
MR. OSTROFF: They have manipulated themselves into that position. But from a statutory point-of-view they are not in any authoritarian position to stop, endorse, or not endorse any standard that the FCC might adopt. The FCC could adopt a standard in opposition to the ATSC. The ATSC is the functional equivalent of the DVB-T organization in Europe (about 230 companies contributed to the standard in one way or another). If the ATSC went to the DVB-T (organizers) and said "we want to adopt your standard," then the DVB-T folks would become the operational entities for providing all of the documentation for the submission and proposal. The Commission would adopt it, so you would have ATSC on one side and DVB-T on the other, and you have two standards authorized for use in the United States.
I might point out that 1) there is absolutely no reason why every television receiver in the United States would not be able to receive DVB-T and ATSC (8-VSB) simultaneously. The manufacturers who are making the DVB-T sets in Europe--now over 800,000 in the public's hands--are the same manufacturers making the ATSC sets. The chip set that would have to be included will be pennies in those quantities. There is no reason why those sets would not be dual standards compatible automatically, just as when you buy an AM-FM radio.
It sounds like a petty figure, but it has been suggested that it would be $50 million to make the integration of the two modulation schemes. Who is going to come up with that money?
MR. OSTROFF: They come up with that money from the profits from illicit sales of 25 million analog TV sets every year at a time when you are trying to move digital into the marketplace.
Again, a lot of these people have departments with annual budgets and if it doesn't have $50 million in it, it has to be allocated from somewhere above.
MR. OSTROFF: But Dale, I don't have $200 million in my budget to build out 60 television stations. Where is that coming from?
One might have thought with tongue in cheek that everyone could borrow it from the Federal government since they alone gain so much value from the return of the old spectrum.
MR. OSTROFF: Wouldn't that be nice! Why can't the Federal government give us all loans to build out our stations to be paid back by returning the spectrum? So, when you talk about budgets, I don't have any sympathy for the CEA (and members).
Still, $50 million is needed for the integration. How is that done?
MR. OSTROFF: I don't know. I think they have to take it out of their (the manufacturer's) G & A. They have to lay off some of their high-paid lobbyist, stop paying dues to CEA, and find the $50 million to do the job. That is peanuts compared to the investment that any one of a dozen television broadcasters have to make to build a system that doesn't work.
Let me add something here about backward compatibility. I find that talk (no going around at the ATSC in Washington) to be offensive. I find it so because the same voices worrying about backward compatibly for 25 to 30 thousand boxes that may be out there (the estimate from CEA of number of decoderrs sold as of June 2000) are pumping out 25 million analog sets, all-of-which are not backward compatible to digital either. So, if they are so concerned about the consumer having the ability to receive digital should there is a standard change, then they should be including a digital decoder in everyone of their analog TV sets they are shipping today. If they aren't doing that, they should sit down and shut up about backward compatibility.
That brings me up to another point. There has been very little sympathy or respect from you with respect to the improvements and changes that have been made in 8-VSB. Are you so convinced that these improvements are non-existent, or are you harboring a prejudicial position?
MR. OSTROFF: No, we are not in a prejudicial position. We said all along that if you make 8-VSB work, do it. A year ago ATSC Chairman Robert Graves and company were saying there is nothing wrong with the standard. It is a receiver implementation problem, they said. Now, all of a sudden, he says maybe we have to make improvements to the standard. I think they need to be honest with the American public and be honest with themselves, and (then) get on with it. The reason I say "get on with it" is that the ATSC process is so burdensome and plodding that if the salve on the industry's rash is: "We are working on modifications to 8-VSB. That is going to solve the problem so everyone should relax and stay the course." That is like telling someone they have cancer but don't worry about it since it is not going to kill you today. Eat a healthy diet and you will be OK. I view the talk about modifying the standard (at the ATSC) and making it backward compatible as just so much talk to try and put people off of the mark of getting on with introducing a standard that is going to work.
I hear of this 2-VSB talk (a non-compatible VSB version for mobile). I find that to be offensive as well. When you are talking about 2-VSB, you are talking half or less the data rate you can do with COFDM! These are the same people who six months ago said, and do still when they get away with it, that you can't do HDTV with COFDM in a 6MHz bandwidth (channel.) At (our demonstrations during) the Congressional hearings (held on July 25, 2000) we were operating at a data rate which was 5% above that of the ATSC data rate. These folks (ATSC) are capable of saying anything to push the industry away from the emerging reality. I have no confidence in modifications to 8-VSB, and I certainly don't take those kind of statements as reason to stop pursuing an ultimate solution.
Would you welcome some ingenious solutions to 8-VSB?
MR. OSTROFF: Absolutely! But my point is that they better be demonstrable and not just mathematical. They better be here now, not give us five years and Moore's law will fix all the problems. I don't want to hear that talk. Unfortunately, Mr. Moore is not paying the interest on the investments we are making in digital television.
John Abel of Geocast stays in close contact with all of the broadcasters due to his development in data casting. He said to me recently that from the stations due on-the-air by the May 2002 deadline a chatter has risen among them saying that it may be better to give the digital channel back and forget the whole damn thing.
I have heard that chatter. I think that is what it is--chatter. But it reflects the level of frustration that exists.
Abel said that no one is talking about digital data business of any kind as an economic solution and they are simply fed up with the entire subject.
I think that is probably true in some circles. It is a reflection of a lack of leadership by the people who started the process. I go right to the Chairman of the FCC. He (William Kennard) has been extremely disingenuous with the way he has treated we broadcasters, burdened and attacked us for our use of spectrum which his agency has licensed us to use.
There is a lot of pressure for spectrum. We have seen new values given to it in European auctions (where recently $40 billion was bid for spectrum earmarked for "wireless"). Any kind of waffling or apparent crash in the DTV transition certainly must invite sharks from other industries. Are you worried about that and losing your spectrum?
Mr. Ostroff: I am worried about sharks in all industries, including our own. I think there are some pretty stupid broadcasters out there who have done things to antagonize the situation. Greed is a great motivator and the wireless industry is salivating at the prospects of getting more (broadcast) spectrum. I think the government has an obligation to the American public to maintain a free state-of-the-art broadcast and communications service. The need for that arises out of the fact that we need to have a multiple-voiced means of reaching the people. It would be a travesty, and I don't want to sound pompous here, but for heaven's sake I think our democracy demands that we have more than a Ted Turner and Rupert Murdoch telling the public what they want the public to hear. The only way today to insure that is to maintain a free over-the-air wireless multivoiced broadcast service. The FCC has done a terrible disservice to the American public by devaluating or diminishing their emphasis on protecting the free over-the-air broadcast service with a short term interests of trying to auction some spectrum.
There seems to be this willingness to sacrifice broadcasters.
Mr. Ostroff: Yes!
Is that just posturing in order to wake people up?
Mr. Ostroff: No, I think it is a legitimate manifestation of greed at the highest levels.
The channel 60 through 69 is being set aside for data. The spectrum will be auctioned this year. That is 54MHz of data in every community. Isn't that a lot of data already?
Mr. Ostroff: It's not high speed data. It's all "straw pipe" stuff for cell phone applications. The problem with the 60 to 69 auctions is again that it is an ill-conceived bureaucratic attempt to get some posturing. I think you are right in terms of posturing to show how the Commission is trying to raise money in an era of budget surpluses. One really has to look at the value of spectrum in terms of something more than simply dollars. You look at it as services. I think the folks who are pursuing that spectrum (channels 60 thru 69) are doing their due-diligence in Washington. In lobbying circles--the AT&Ts, Sprints, the MCIs--are doing their due-diligence to make sure that their interests are pursued. Broadcasters have been afraid to use their most powerful tool to protect both their and the American public's interest. That powerful tool is the ability of broadcasters to communicate directly with the American people.
A lot of people feel that broadcasters have not done a very good job in communicating the whole digital movement. If broadcasting wanted to see this transition occur, they have the publicity power to move mountains. We have not seen much of that.
Mr. Ostroff: Broadcasters are reticent to enter a public debate that involves their own interest and using their own airwaves to do it. There was one example of that when Robert Dole tried to call the spectrum allocation "corporate welfare" and force broadcasters to bid on it. The NAB produced a spot countering which ran for a few weeks, and they (NAB) won..
Should it turn out that the two systems to be tested by MSTV/CEA are equivalent for all the applications in which they are being tested, I don't think there is an issue. I would be surprised if that is the outcome.
If it was the outcome, would you fly the white flag and say, "Thank goodness we have something to work with and we are on our way?"
Mr. Ostroff: We know that can't be the outcome with the technology that existed when we did the testing (in Baltimore) a year ago. The question is: Has new technology emerged on the receiver side to change that picture? A lot of effort has gone into determining what the best receivers are currently available. both on the professional and consumer level, and use those receivers. If those results you are postulating should emerge...gee, the 8-VSB has improved enormously, which is what would have to be the case. Then there is another battle. The issue would have to be: "How can we be assured that technology will find its way into all of the consumer products that are manufactured?"
This goes to receiver standards? Who sets them? Who enforces it?
Mr. Ostroff: Yes, the reason I talked about receiver standards nine months ago (which was premature since you cannot talk about setting a receiver standard without knowing what it takes to make the receiver work). I think they still don't know today because I personally don't think there is a way to make it work. But I would be overjoyed if they have found a way to make the receivers work. Then my next point of focus would be, OK., I want every receiver in the United States to have that technology. We can't have high-end receivers that work and low-ed receivers that don't, at least from a broadcaster's point-of-view.
What happens in the case of the gap (performance differences for those things tested for) closing between the two systems? At what point would that satisfy you?
Mr. Ostroff: I don't know. It's like the old story about pornography--I will know it when I see it. I don't know what that point is.
Michael Petricone from CEA said to me that at some point the gap closing will reach what mus be called acceptable.
Mr. Ostroff: I think they are premature because the testing that is being done is using the best receivers that are acknowledged by all parties. If the differences are eliminated, we will know it. Then it gets to a spitting contest about what is more important--one thing or another. But the differences that existed a year ago were so marked that we will (definitely) know.
One resistance to wide acceptance of COFDM is that fact that companies like PACE are saying they are ready to start delivering boxes as soon as COFDM is included in the US standard. It would certainly be uncharacteristic of their competitors to let them get such a significant jump on the marketplace.
Mr. Ostroff: PACE has made that representation to a letter to Rep. Billy Tauzin's Telecommunications and Finance subcommittee. I think there are interests in the United States who would like to keep out players that they don't have to deal with today. I might add that the HDTV label on digital television may very well have been glued on because they thought they had to keep the computer out of this business,
I don't think so. I had many long talks with the architects of the CE strategy and they thought HDTV was the only DTV product that had enough differentiation to make it in the marketplace. The computer guys were flirting with the CE people to make their future products for them so they could concentrate on software. Everyone decided that people might want a better picture but few thought that standard resolution mutliplexing, data, and other ancillary items would drive the market. Even Joe Donahue (retired CEO of RCA) said that it could end-up an unmitigated disaster.
Mr. Ostroff: Donahue is right. We are trying to avoid that disaster. The question is, who is it a disaster for? When you start talking about things like that you really scare capital aware. You terrify the guy who signs the check. As long as that is happening, this delay continues. I know those broadcasters I have been trying to sell transmitters to have said, "I am not buying anything until I have a standard that I know works. I have done some tests on my own and I don't like the results. I don't give a damn about a government edict because if they put a product forward and force us to use it while it doesn't work, we will see them in court."
If you want to talk about staying the course and not addressing it (the problem) now I think you can see 20 years of delay while everyone is in court. The FCC comes in and says, "OK, you didn't meet the deadline. Now we are going to do this or that. The next thing you know you are in court."
What is the deadline missing penalty?
Mr. Ostroff: I don't know. I think the initial thought was that you lose your right to have a digital channel and it can be given to another player. You forfeit your digital channel by not building. I could see that happening. That is like the tobacco industry being sued by the states. It can go on for 20 years, and during that time nothing happens in digital television. That is the outcome we are heading for if we don't do something.
Let's speculate that on the other hand the upcoming MSTV test proves your case. It says to everyone, "hey, we have made a mistake. We need to fix it by at least making this inclusion (of COFDM). The manufacturers wipe their brow over the big job ahead, but say, "Well it's the new criteria for broadcast, and we need to follow it." Don't we have two years in front of us before we can have the product engineered and into the stores?
Mr. Ostroff: I don't buy that for a microsecond. You say, "Fellas, you made 700,000 sets in the UK." I don't see two years here. Why don't you just import them right now? "Well, you know, we have to change the tuner." Ok, I will give you two months to do that. We have 6MHz boxes for COFDM right here in Baltimore. If a manufacturer says "I can't do it" there is another manufacturer in Korea, Singapore, Taiwan, Germany, UK, etc., There is a market opportunity there, and I am going to jump on it. That fear of loss of market share will take that two years down considerably.
But let's give them some time, Even if the FCC were to pen that in today there is some developmental time. What do you do in the interim when you have a product on the shelf that is about to become obsolete, and another one on the drawing board?
Mr. Ostroff: You are making the assumption that 8-VSB is going to be shut off.
I make in this assumption; that anyone buying just an 8-VSB box probably isn't buying much of your future.
Mr. Ostroff: Well, that's right, but not enough have bought the 8-VSB box (to worry about).
What do you do during the continuing roll out? If no delay is an option we want to follow, how are we going to make this change without making some kind of market interruption?
Mr. Ostroff: Twenty five million analog sets go out the Circuit Cities of the world this year. The factories are still humming making these analog TV sets in the year 2000. Somewhere in the back room there is a production line that make a few thousand set top boxes for digital television. The point is that there is no massive tooling and production for digital TV sets that could be affected by a standards change. The big screen sets, the displays remain untouched by a transmission standard change. The set top box is the thing that gets touched. In Europe today you can buy a set top box for under $200 US.
Will that demodulate a full HDTV signal, however?
Mr. Ostroff: I don't know. That is a question for those who make the boxes. But I can tell you that the boxes we have here (which are equivalent to the European boxes) are demodulating HDTV. My instincts tell me it is not a big deal to do that. My point is that the impact on the consumer electronic manufactures really goes to how many of these 8-VSB only set top boxes do they have in inventory that they are going to write off or sell at deep discount., or scrap. People are going to want a dual standard box. That is a business risk they have to consider. In comparison to the 25 million analog sets humming off their production lines it seems to be a footing error in their inventory. It should be anyway. So, I find their arguments about tooling to be disingenuous. It doesn't make sense.
Of course, but you must respect that these people do protect every dollar.
Mr. Ostroff: You know what they are protecting, Dale? They are protecting the 25 million analog set business every year. They have not figured out how to transition from that 25 million analog set market to 25 million digital sets.
If you dissect the issue, broadcaster have put enough signals on the air. There is enough on the air in the top ten markets to warrant things happening. Yet, the TV set manufacturers haven't figured out how to get form one end of the chasm to the other side without having a year or two or three where they have no sales. Their wish was that somehow that HDTV would be sucked up so quickly that they would never miss a beat. Now realizing that HDTV is being sucked up slowly they are stuck. They don't know how to get out of the analog business into the digital business without taking a big hit. I sympathize with them. That is their problem.
One other point I would like to make. I hear the consumer guys and Gary Shapiro (president of Consumer Electronics Association) blaming broadcasters for not putting on more HDTV material. Number one, he doesn't understand our business. Don't blame the Sinclairs of the world for the lack of HDTV programming. We don't have programming. We deliver programming. If you want to blame anyone, go to the networksl go to Hollywood. Ask them why they are not broadcasting more HDTV material. Why aren't you creating more HDTV material? The networks will say, "Talk to Hollywood about interoperability. Talk to them about copyright protection."
Until those political problems are resolved, there cannot be the broadcasting of very much HDTV material (that cannot be protected under the copyright law). Don't blame the Sinclairs. The only content we have is our 10 O'clock news.
In the event that there was a signal provider that was not from the traditional networks, would/could you act as an affiliate?
Mr. Ostroff: The question goes to the nature of the affiliation contracts that we had. It would depend on how that material were made available--what parts of the broadcast day would they be available. You really have to quantify that question. Truly if there was a HDTV program supplier with viewable material--premium programming--we would attempt to bring it to our audience within the limitations of our network affiliations. It is, of course, a hypothetical question. I believe that most of the premium HDTV programming would (still) come through the networks.
One of the powerful images used to symbolize the HDTV lift off has been the space shuttle lift off. We clearly see that enormous power is used and the vehicle slowly rises from its pad, moving faster and faster as it leaves gravity until it reaches escape velocity and moving effortlessly in its own orbit. But we don't have that enormous fire and plume of smoke showing in our DTV rocket. Don't we need this kind of power?
Mr. Ostroff: The early days of rocketry there were lots of images of these things lifting off and then falling over and blowing up. I think we are in a state right now where this rocket is under-powered and over-burdened with political interference. It may blow up.
What do you do then? Do you cancel out everything, or make a new attempt?
Mr. Ostroff: If it blows up the broadcasters will be more witness to it than be hit by flying debris. I think the broadcasters would then come into the arena and make a proposal that will make sense from a business and economic point-of-view, and try to rebuild it. Basically, we are going to the moon, but we are not so sure that with its current systems this rocket-ship is going to get there.
Clearing up any complex issue requires that at least one part of it is perfectly clear. What is that clear part we can build upon?
Mr. Ostroff: I understand that Commissioner Susan Ness has made a statement that we should not expect anything to happen until these transmission issues are resolved. Due to the political season and change in administration this cannot occur at the political level until next summer.
Can we wait until then? Can we learn enough from the MSTV testing to make a new commitment?
Mr. Ostroff: You will have also a new administration one way of the other. You are going to have an FCC that is reticent to take any move three to six months into their term.
So, we have year before anything can be done. At the same time you have manufacturers here building sets, paying for programming, and trying to keep this thing going. Not every broadcasters is in agreement with you that COFDM is essential to their terrain,
Mr. Ostroff: That is why I point out that 8-VSB is not being replaced, and if you have a dual standard receiver and concerned over reach, you stay transmitting 8-VSB, But if you are in Chicago, New York, Philadelphia, Baltimore, LA, you go COFDM. We ought to be able to do that.
Some, including Gary Shapiro, have questioned your role at Acrodyne. It is being interpreted from a spring press release that Acrodyne will benefit from a delay from the digital transmission standard as it will sell (from Acrodyne) more analog transmitters to broadcasters.
Mr. Ostroff: Oh gees! Have you been following recent public events for Acrodyne? I don't like to bring up bad news, but let me fill you in. Trading in the (Acrodyne) stock has been halted. We are re-stating 1999 results. I have four class action suits against the company. So, it's not exactly a premium motivator in terms of our HDTV and digital television policy. It never was. Gary Shapiro and those believing this line are throwing out the largest and smelliest red herring I have seen in a long time. He has a lot of nerve to bring that up. Acrodyne is the LAST thing we would use to help us set our policy. That would not be the tail wagging the dog, that would be a leg of a flea wagging the tail of the dog. I mean Acrodyne's position in Sinclair at this point represents a footing error in one of our stations revenue statements. I think our critics can do better than that!
Thank you Nat.
