CEA FOCUSING ON CABLE COMPATIBILITY, NOT DTV TUNERS

But pushing TV set makers to include DTV tuner “overlooks the critical issues of cable compatibility and content protection,” Shapiro said. Despite CEA’s efforts to promote antenna reception of DTV, he acknowledged that “antennas on roofs really aren’t that cool anymore.” He said most potential DTV customers preferred to receive programming via cable or satellite, so “what really matters is cable compatibility. Nothing else is as important as plug-and- play.”

CEA was polling set makers during EIA convention in Washington this week on reaction to Powell’s plan, which would encourage broadcast DTV programming and cable DTV carriage in return for DTV tuners. Group didn’t release poll results, but we're told some manufacturers were very resistant, while others were more open to idea. Divide tended to depend on manufacturer’s product line, with those already heavily digital more receptive, while those with long line of analog products were resistant. Thomson’s David Arland, for example, said DTV tuners would mean initial premium added to price of even low-end sets of “several hundred dollars,” effectively doubling price. He said that would price those sets out of market. Arland said Thomson wasn’t willing to discuss DTV tuners until cable interoperability was assured. Mitsubishi Vp Robert Perry said it could take year or more to get additional cost of DTV tuner down to $150-$200.

Program producers’ content protection demands “would nearly eliminate consumer home recording,” Shapiro said, and “nearly every manufacturer” refuses to accept that (CD April 24 p12). He said he understood content owners’ concerns, but “Americans believe they have the right to move stuff around their home.”

CEA remains “fundamentally opposed” to congressional or other govt. action to mandate DTV compatibility decisions, Shapiro said, “particularly considering how well things are going. This is too important for a shot clock approach.”

Virtually absent from DTV discussions was DTV must- carry. Industry officials seemed to indicate that although cable carriage of DTV was important, market was moving to solve problem, making govt. mandate less important. Similar approach seemed to be emerging at recent NAB convention, although broadcasters seemed to be indicating more resignation that govt. action was unlikely.

Because DBS is carrying DTV, “cable is rushing to HDTV in a big way,” Shapiro said. He said “a lot of good things are happening” with DBS carriage of DTV, and cable executives appeared to be moving quickly toward DTV carriage. Point was echoed by NBC Chief Technologist Wendell Bailey, ex-NCTA official. He said all 10 of top-10 cable MSOs either had started carrying NBC’s DTV feed or had been instructed by executives to move quickly in that direction.

Overall, DTV transition has been “great success,” said Sean Wargo, CEA senior analyst. He told summit that there already was installed base of 2.6 million DTV products since DTV was launched in 1999, and DTV recently passed PC as fastest-adopted CE product, also topping such items as color TVs and VCRs. DTV sales in March totaled $260 million, more than double year ago, CEA figures indicated, and 140,000 units were sold, vs. 75 million in March year ago. Wargo predicted DTV sales would reach 20 million by 2005, about 10 times current level. “This is moving toward a mass market,” he said, although it’s “still clearly in the early adopter phase.” Shapiro called introduction “phenomenal, especially for a product as expensive as this is.”

There has been “tremendous progress” in transition, said Bruce Allan, pres. of Bcst. Div. of DTV transmitter maker Harris. Although only few hundred DTV stations are on air, he said important figure was that stations had placed enough DTV transmitter orders to have nearly 700 DTV stations on air by end of year. Mitsubishi’s Perry said nearly 80% of U.S. households already could receive over-air DTV, cable was “coming on line” and consumers were “signaling their intent” by buying DTV products.

Big problem is that most of DTV products can’t receive over-air DTV, said David Liroff of WGBH Boston. He said only about 200,000 DTV sets sold to date had over-air capability, saying that meant that DTV was “still in the Cheers phase: If you have a DTV set everybody knows your name… Quite clearly the broadcast DTV transition is dead on arrival.” He said not enough broadcast programming was reaching consumers: “The pump is not being primed.”

On afternoon panel on solving challenges of DTV transition, Andrew Levin, aide to Rep. Dingell (D-Mich.), ranking minority member of House Commerce Committee, said “some really crazy things” are tucked deep into lengthy Point of Deployment-Host Interface License Agreement (PHILA). PHILA was drawn up by CableLabs as license for secure technology to prevent piracy of digital signals over cable. Levin said committee had asked cable industry about PHILA, “and the answers we get back are, ‘Oh, don’t worry about it. We're not going to use that and we don’t really care about the other.’ But they're still there,” Levin said, apparently referring to provisions that give cable operators ability to control consumers’ copying ability and how many times piece of content can be viewed. “There are things in there that are specifically detrimental to consumers,” he said. Dingell and others on committee intend to concentrate on “getting those things out of there,” Levin said.

Separately, NCTA issued White Paper on transition to digital TV that concluded that govt. should stand on sidelines as industries worked among themselves to solve issues. Paper said cable and CE industries already had reached agreements that promoted compatibility for delivery of digital signals between digital set-top boxes and DTVs and between digital cable systems and DTVs. “Those agreements help ensure there are no compatibility barriers to cable system providing digital content to consumers using digital set-top boxes or integrated DTV sets,” paper said.

House Commerce Committee-led DTV roundtable will keep transition deadline legislation on hold as long as industry stakeholders continue to make progress in negotiations, Chmn. Tauzin (R-La.) said in morning keynote. Short of failed private sector negotiations, legislation will be introduced only to codify final agreements, he said: “Once the agreements are reached, my committee and I will stand ready to adopt legislation to enforce” industry agreements. Although he said he respected goal of bill (S-2048) by Senate Commerce Committee Chmn. Hollings (D-S.C.) that would establish firm deadline for DTV transition, specifically as it applied to content protection debate, he didn’t intend to pursue similar action. Hollings’ bill would have FCC mandate digital rights management technology for every digital receiving device if industry players didn’t reach agreement on issue in year. Tauzin said: “I'd rather not take that approach.”

Despite past finger-pointing for slower-than-expected hardware and content rollout, Tauzin said privately-held DTV roundtable was helping clarify “who has to make the decision next” among cable, broadcasting and electronics industries: “We're going to get decisions made… and we'll get this transition.” Among few examples of industry-specific progress, he pointed out that CBS had committed to making half its prime time programming available in digital: “I don’t see why the other networks can’t follow their lead.”

Tauzin lauded DTV transition proposal recently presented by FCC Chmn. Powell, who Tauzin said was “investing his reputation” in order to implement transition successfully. Tauzin said committee staff was planning meetings with Powell aides to address DTV-related issues that weren’t included in proposal, such as fair use of content for noncommercial purposes.