Sinclair's Nat Ostroff Challenges CEA and ATSC Opposition to Broadcasters' COFDM Flexibility Petition

The prolonged and unusual pre-comment period on the Broadcasters' FCC petition has been raging for many weeks. During this time I have become puzzled by the vitriolic nature of the responses from ATSC and CEA. I frankly did not understand the motivation for such a polarized point of view. For example, CEA should want to sell as many TV sets as possible and a proposal that opens the door to simpler consumer reception and new portable applications surely cannot threaten that objective. I also thought that the ATSC was chartered to develop and promote the best over-the-air DTV system possible for the United States. As such, I thought that it would be in the interest of the ATSC to explore recent developments in technology that might be added to the package of specifications that they had already developed. It is now crystal clear that I have been mistaken and had relied on some very naive assumptions.

Consider the position that CEA has taken on the Broadcasters' petition. They are strongly opposed to it ever seeing the light of day. Why? CEA points to the "market confusion" and "delay" that a modification to the transmission standard would create. They also want broadcasters to have faith and wait for yet another attempt to make a chip that performs as well as another already established alternative technology called COFDM. They point to the anticipated but yet to be proven performance of newer "next generation" adaptive equalizer chips. (This at a time when COFDM is running rings around the current 8VSB receivers and has achieved massive acceptance around the world.) These are their two stated and principle reasons for opposition to the Broadcasters' petition. Using intentional misrepresentations and fear tactics, CEA has attempted to kill the idea of broadcaster flexibility. Why have they taken such a position?

The current Christmas selling season is a make or break one for many DTV manufacturers' marketing strategies. This is the time when it all was going to happen for them. A whole new industry was to unfold. It was called DTV. So far, DTV as a "revolution" has not materialized. If you go into some consumer electronics stores this season, you may find a DTV display unit. Most of the units being shown for sale can't display a full 1080i HDTV picture but, no matter, they do a wonderful job with the video from a DVD player and a satellite feed. Most, if not all, of the consumer electronic stores have avoided using an off-the-air signal. In fact, many stores have little or no knowledge of the status of the local stations DTV signals. More importantly, they don't care!

What is going on here? The apparent sales strategy of the consumer industry is to focus on DVD and satellite sales and ignore over-the-air. One might say over-the-air TV is being written off by the very same industry that is trying to stop the broadcasters' attempt to gain a little flexibility and insurance that they will be a player in the coming DTV world. It becomes apparent that the CEA argument that the Broadcasters' petition will confuse the marketplace is aimed at protecting DVD, satellite and DTV display sales. Perhaps, they fear the consumer will hesitate to buy such hardware if they became aware that the "good old local broadcast signal" is not going to be easily available. Furthermore, they may have second thoughts if the consumer knew that the receiver box they just bought might not work for all stations. They may even think, "Oh no, another Beta versus VHS situation." Does CEA want to avoid this loss of business scenario, even if it means permanently handicapping the nation's over the air industry? I think the answer is YES! They have written off over-the-air delivery as being an unimportant component of their sales pitch. Thus they do not want to invest another cent in improving something that is not necessary to their perceived success. There is even more to consider.

Notice that the new chip efforts, such as they are, are not coming from the traditional CE manufacturers. The broadcasters should recognize that even if a new chip solution arises, there is no assurance that it will find its way into all of the TV sets sold. This could lead to a two-tier situation, that is, one set type for cable and satellite and another more expensive set that adds over-the-air reception. This outcome would have a very chilling effect on the value of over-the-air spectrum and needs to be avoided at all costs. Are receiver standards the answer? Probably not. CEA has opposed such a move even more vigorously than its opposition to the Broadcasters' petition. Furthermore, international trade issues with the WTO could render any move into receiver standards pointless.

There has been a lot of negative commentary coming from Thomson Multimedia recently about Sinclair and the broadcasters' effort. It now seems apparent that Sinclair and the Broadcasters' petition is caught in a crossfire over the need for Thomson and its RCA brands to promote and defend their recent IPO, and subsequent resulting stock price, and their vested interest in the success of their "baby" DirecTV. It is useful to note that Thomson and Sarnoff invested capital and intellectual property to create DirecTV. After its launch, Thomson licensed other CE companies to manufacture set top boxes and, as an owner of DirecTV, Thomson gets a piece of the profits. It is no surprise then that some Thomson DTV receivers are being equipped with a built-in satellite receiver. One might ask, why can such a dual mode receiver be acceptable but adding a COFDM chip not be possible? It is also useful to consider Thomson's and its licensees' point of view. That is, free over-the-air TV competes with satellite TV and a robust over the air DTV service is not in the best interest of their DirecTV investments. Therefore, not only does the Broadcasters' petition threaten the market for the sale of equipment, but it also threatens the market capitalization of Thomson Multimedia and the sales of other Thomson partners in DirecTV. Why? Is not a set of robust off-air DTV signals a consumer disincentive to go out and buy a satellite dish? The fact that Thomson has DirecTV in the United States but not in the rest of the world could explain why Thomson supports COFDM everywhere in the world except in the United States and its 8VSB allies. No wonder the Broadcasters' petition has drawn such fire and no wonder the FCC has failed to act. Could it be that the FCC does not want to act at this time for commercial and capital market considerations?

Where is ATSC in all of this? Why are they so dead set against even opening a discussion on the subject of 8VSB reception? If they are convinced that 8VSB does everything that COFDM can do, including the now demanded portability of COFDM, then they should have no fear in an open debate based on real and public technical tests. One thing that may not be obvious, contrary to popular wisdom, is that the ATSC is not bound to define or promote a standard that will provide the best over-the-air DTV system for the United States. While this may come as a revelation, it should not be a surprise. The ATSC is only bound to follow the directives of its members. The FCC is supposed to review and adopt or modify the standards recommendations, accept them and/or modify them, after a detailed in-depth technical and economic analysis. Notice that there is no room for a political analysis. Given that the majority of the ATSC membership represents the consumer electronics industry, it is no wonder that ATSC is joined at the hip to that industry. We should therefore not be surprised that the ATSC attacks the Broadcasters' petition with the same ferocity, as does the CEA.

Who then will protect the American consumer and the American broadcast industry from the singularly focused business strategy of the Consumer Electronics industry? This is what the FCC is supposed to do. The FCC is the one organization in a position to balance the needs of the American public and consumer as well as that of the free over-the-air, FCC-licensed broadcaster against the single-minded and self-serving strategies of a consumer electronics industry, an industry that is more international than domestic in both its ownership and its point of view.

All broadcasters who value their businesses and want to participate fully in the DTV future, as well as members of the viewing public who want to preserve free television, need to make it clear to the FCC that they and eventually the American public, expect the FCC to do its job and meet the responsibility that clearly falls to their offices. Ask, no demand, that the FCC do its job and open the debate on the performance of over-the-air DTV using the current 8VSB modulation standard. To not do so abdicates the future possibilities of free over-the-air broadcast television to CEA, ATSC and their member-ships. If we value the great traditions of free over-the-air television, can we only hope that broadcasters and the public will rise up and take control of their own destiny?

Hope is one thing, action is another. Now is the time to contact the FCC and let them know that the Broadcasters' petition needs to undergo the scrutiny of public debate. Let the FCC know your views. Do it today because time is of the essence.

Thank you.