FCC Initiates Rulemaking Addressing Numerous DTV Conversion Issues
Earlier this week, the Federal Communications Commission released a Notice of Proposed Rulemaking (“NPRM”) in its Second Periodic Review of the Commission’s Rules and Policies Affecting the Conversion to Digital Television (“DTV”). The FCC clearly wishes to expedite the pending, but slow-moving, conversion to DTV and the recovery of spectrum currently being used by broadcasters to transmit their analog signals. To that end, the FCC has proposed numerous rule changes that, if adopted, will impact broadcasters, cable operators, satellite distributors, cable programming networks, and equipment manufacturers. The NPRM places special attention on the obligation of broadcasters to digitally simulcast their analog signals and quickly expand digital operations to maximize DTV coverage.
Extension of Statutory Deadline for Analog Transmissions
The FCC originally set Dec. 31, 2006, as its deadline for the DTV conversion. Congress codified this deadline in Section 309(j)(14) of the Communications Act, which requires the FCC to reclaim, by that date, the 6 MHz of spectrum that each broadcaster currently uses for transmission of analog television service, unless one or more of the following three conditions exist: (1) a top four broadcast network affiliate in the market is not broadcasting a digital signal; (2) digital-to-analog converter technology is not “generally available” in the market; or (3) at least 15 percent of the television households in the market do not subscribe to a cable system or other multichannel video program distributor (“MVPD”) carrying each of the DTV stations operating in the market and cannot otherwise receive the DTV signal over the air.
It is widely accepted that the DTV conversion will not be complete by the 2006 deadline. There are varying charges as to the primary source of the delay. There is much potential for political finger pointing, because Congress is very eager to reclaim and auction valuable analog spectrum. For example, broadcasters have repeatedly asserted that, without a comprehensive mandatory carriage regime imposed on cable operators and satellite distributors, the conversion will never take place.
There is still remarkable uncertainty as to how the statutory test establishing the digital conversion deadline is to be applied. The NPRM poses a long series of questions through which the FCC hopes to provide clarification and certainty. Depending on how the questions are answered, a broadcast station’s eligibility to continue operating in an analog mode could be greatly affected, and a particular industry may be painted as the cause for any resulting delay in the DTV conversion. There is also a chance that the FCC may attempt to impose a regulatory solution to any delay that is caused if broadcasters are able to rely on the conditions to obtain extensions.
A few of the numerous interpretative issues relating to these conditions include:
- The definition of a broadcaster’s market. The FCC has proposed and seeks comment on three possible definitions of a TV station’s market: the broadcaster’s designated market area (“DMA”); a modified DMA; or its grade B contour. The definition of market is especially relevant to the condition requiring 15 percent subscription to MVPD or cable service. The FCC notes, for example, that a cable operator might carry every digital station that provides grade B coverage, but might not carry a digital TV station assigned to the same DMA if it is unable to provide a grade B signal to the cable system. The FCC also notes that if the market is defined as a DMA, the 15 percent condition may always be satisfied in some markets. The resulting lack of carriage in the “market” could form the basis for broadcasters to obtain DTV conversion extensions that, in turn, could precipitate further FCC action to address this potential source of delay.
- The nature and extent of the cable or satellite carriage obligation. The FCC asks, for example, whether a broadcaster should be precluded from obtaining an extension based on the penetration condition if a cable operator is carrying the digital signals of all of the primary, full power television stations in the market, or whether the cable operator must also be carrying Class A LPTV stations or other secondary non-Class A LPTV stations and TV translators to foreclose an extension. The FCC also asks whether a cable system should be considered to be “carrying” DTV signals if they are being converted to analog at the cable headend. In other words, the FCC questions whether cable or MVPD carriage should be defined to include carriage only in digital mode (i.e., via either a DTV-capable set with an integrated tuner or separate DTV set-top converter), or if carriage in analog mode (i.e., a digital signal converted to analog by a set-top digital-to-analog converter that allows the signal to be displayed on a non-DTV set or at the cable headend) is sufficient to preclude an extension, as long as the consumer has the equipment necessary to view the digital signal in either format. To the extent that the transmission or viewing of digital signals in analog form becomes the basis for granting extensions and further delaying the DTV conversion, the FCC may take regulatory measures to remedy this delay.
- The technical specifications for equipment required by consumers to view digital signals. The FCC asks, for example, whether television receivers “capable of receiving” DTV signals should be defined to include television sets equipped with either integrated or separate (e.g., set-top box) DTV tuners. If consumers are deemed to have access to over the air DTV signals using separate DTV tuners, then cable carriage (even if in analog form) becomes less critical to the conversion process. The FCC also asks whether the definition of “digital analog converter” should include units that are not capable of converting digital television broadcast signals to analog in all digital formats, such as HDTV, for the purpose of determining whether such converters are “generally available.” And, the FCC asks how it should interpret the phrase “generally available” as it applies to digital to analog converter technology, i.e., whether the converters are merely available for sale at retail outlets, or for sale or lease by cable operators or satellite providers, whether cost should be a consideration, or whether the actual number of units purchased and in use by consumers should be the only criterion used.
- The conditions for DTV broadcast coverage. The FCC asks whether all stations in a market licensed to or affiliated with a top-four network must be broadcasting in digital before analog service is required to cease in the market, even if a top-four network has more than one affiliate in the market. The FCC also asks whether, in assessing whether a major network is transmitting in digital, the network must be replicating its analog service area.
How these questions are answered may impact the condition upon which broadcasters rely to request extensions of the mandatory DTV conversion date, and thus, could determine which industry, if any, is blamed for the delay.
DTV Labeling Requirements and Consumer Awareness
In November 2002, the General Accounting Office issued a report that concluded that a large majority of consumers did not understand the equipment needed to receive digital signals, and that this lack of understanding constituted a major barrier to the DTV conversion. Recent draft legislation would have required clear disclosure of the limitations of TV receivers. The FCC is now asking whether it should adopt its own labeling requirements for television receivers. Specifically, the FCC asks whether it should require:
- Labeling on “pure monitors” to advise consumers that the monitor cannot receive programming unless it is attached to an off-air tuner, or cable or satellite receiver;
- Labeling on digital television receivers that are not “digital cable ready” to indicate that they “will not receive cable or satellite programming without the use of a converter”;
- Labeling on analog-only sets explaining that a converter or external DTV tuner will be needed to ensure reception of television broadcast signals after local stations complete their conversion to digital-only broadcasting; and
- The inclusion of a digital conversion fact sheet to be provided by retailers with the purchase of all new television equipment.
The NPRM seeks comment generally on whether the FCC should implement any labeling and notice requirements for consumer television equipment to assist the transition and protect consumers, and whether it has the statutory authority to do so.
Program System and Information Protocol (“PSIP”)
Broadcast stations can include data within their transmission to facilitate a host of user functions including channel tuning, closed-captioning, second audio programming, V-chip features, program listings, and event descriptions. The cable industry has agreed to carry certain PSIP information, although most digital broadcasters have not yet fully utilized the PSIP tables. In the NPRM, the FCC asks whether it should make all, or some part, of the new PSIP standards a mandatory requirement for broadcasters.
The FCC also requests any information relevant to the progress of the DTV transition in specific areas, including the extent to which cable operators and satellite distributors are carrying digital signals, the amount of standard definition and high definition digital programming being produced, and the general availability of DTV consumer equipment.
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Comments in this proceeding are due on April 14, 2003, with reply comments due on May 14, 2003. Please let us know if you would like to receive a copy of or discuss the NPRM or the DTV transition in general, or if you are interested in filing comments in this proceeding.