The Origins and Future Prospects of Digital Television

Digital television is a superior television format that delivers better pictures and sound, uses the broadcast spectrum more efficiently, and adds versatility to the range of applications. Often referred to as DTV, (1) digital television also represents a new technological infrastructure for broadcast television and thus a new economic and competitive paradigm. This new transmission technology invites a broad reassessment of established programming practices, competitive strategies, and regulatory requirements, including the public interest obligations that have always been considered fundamental to broadcast television in this country.

To understand fully the new framework of legal and technical standards that will guide the development of digital television -- and thus the likely business models and most appropriate public interest standards -- it is important to understand the evolution of digital television over the past 11 years. This section recounts that history. It also explains the statutory and regulatory standards that will govern DTV, barriers that may impede implementation of the new technology, and unresolved policy issues that require action by the Federal Communications Commission (FCC) and Congress.


What is Digital Television?

Digital television is a new technology for transmitting and receiving broadcast television signals. Using an additional 6 megahertz (MHz) of broadcast spectrum temporarily granted by Congress and the FCC for a period of no fewer than 9 years, broadcasters will be able to develop a diverse range of new digital television programming and services while continuing to transmit conventional analog television programming on their existing allotments of spectrum, as required by the Telecommunications Act of 1996.(2)

A digital standard is superior to analog because of its greater accuracy, versatility, efficiency, and interoperability with other electronic media. Digital signals also have the advantage of generating no noise or "ghosting," and being more resistant to signal interference. Within the range of the signal, this results in a perfect signal.

One of the primary rationales for the Nation's transition to digital television is high-definition television, or HDTV. This transmission standard contains up to six times more data than conventional television signals and at least twice the picture resolution. HDTV images have a 16-to-9 aspect ratio (the ratio of width to height), providing a wider image than the 4-to-3 ratio that has characterized television since 1941. This higher resolution and different aspect ratio makes HDTV images substantially more vivid and engaging than the images produced by the existing television format, and that effect is enhanced by five discrete channels of CD-quality audio.

But DTV is not just about HDTV. As a digital (and not analog) signal, DTV enables broadcasters to offer a variety of innovations. Instead of sending an HDTV signal of 19.4 megabits per second, for example, a broadcast station can send as many as five digital "standard-definition television" (SDTV) signals, each of which might consist of 4 to 5 megabits per second. Although SDTV images are not as sharp as HDTV, they are superior to existing television images. This new capacity, known as "multicasting" or "multiplexing," is expected to allow broadcasters to compete with other multichannel media such as cable and direct broadcast satellite systems. Moreover, as new advances in compression technology occur in the years ahead, broadcast stations are expected to fit even more SDTV signals into the same spectrum allotment.

Another DTV capability is the ability to provide new kinds of video and data services, such as subscription television programming, computer software distribution, data transmissions, teletext, interactive services, and audio signals, among others. Referred to as "ancillary and supplementary services" under the Telecommunications Act of 1996, these services include such potentially revenue-producing innovations as stock prices, sports scores, classified advertising, paging services, "zoned" news reports, advertising targeted to specific television sets, "time-shifted" video programming, and closed-circuit television services.

These choices -- HDTV, multicasting, and innovative video/information services -- are not mutually exclusive. Within a single programming day, a broadcaster will have the flexibility to shift back and forth between different DTV modes in different day parts. During daytime, for example, a station might show four SDTV channels; during primetime, programming might switch to a single HDTV program such as a movie or wide-screen sporting event. Because different gradations of HDTV and SDTV picture resolution are possible -- there are 18 different transmission formats -- a station can mix and match video programming with data services, provided that the various signals fit within the 6 MHz bandwidth.

All this suggests that over the next 10 to 15 years, DTV will usher in a sweeping transformation of broadcast television -- its programming and services, its revenue sources, its ownership structures, and its outside partnerships. Although many existing programming genres and styles will surely continue, innovations in video programming and information services will arise, fueled in no small part by the anticipated convergence of personal computer and television technologies. In addition, broadcast television may develop new services in alliance with other telecommunications media -- a scenario made possible by digital code, which is increasingly becoming the common language for all electronic media.

It is difficult to predict which programming and revenue models broadcasters will choose to develop as they commence DTV transmission. The Telecommunications Act of 1996, which authorized the FCC to give an additional 6 MHz channel to existing broadcasters for digital transmissions, is deliberately flexible.(3) Much will depend on the competitive opportunities that broadcasters identify as promising, emerging market conditions, and the regulatory groundrules.


A Brief History of Digital Television Technology

For almost 60 years, television broadcasters have transmitted signals based on the "NTSC standard." This technical format, developed and recommended by the National Television Systems Committee, has remained largely unchanged since it was adopted by the FCC in 1941.(4) The most significant modifications have been the introduction of color television in 1953; "ghost canceling" provisions to enhance picture clarity; the use of a previously unused portion of the transmission signal called the "vertical blanking interval" to send closed captioning; and stereophonic sound.

Although television engineers had long envisioned ways to upgrade the existing NTSC standard, for many years the broadcast community, Congress, and the FCC showed little interest in undertaking such a large, complex challenge. This view changed in the mid-1980s as Japanese consumer electronics firms forged ahead with the development of HDTV technology, and as the MUSE analog format proposed by NHK, a Japanese company, was seen as a pacesetter that threatened to eclipse U.S. electronics companies. During this period, the FCC considered reassigning some vacant portions of the broadcast spectrum to so-called Land Mobile users -- police departments, emergency services, delivery companies, and others. At that point, broadcasters declared their interest in reserving this portion of the spectrum for HDTV.(5)

To explore the issues posed by HDTV, the FCC issued its First Notice of Inquiry on Advanced Television Service in July 1987(6) and a few months later, appointed a 25-member advisory panel -- the Advisory Committee on Advanced Television Service (ACATS). Chaired by former FCC Chairman Richard E. Wiley, ACATS was charged with reviewing the technical issues and recommending an ATV system to the FCC.

The first congressional hearing on HDTV was held in October 1987. This event helped galvanize the ACATS to announce an open competition for development of the best advanced television standard. Until June 1990, the Japanese MUSE standard -- based on an analog system -- was the front-runner among the more than 23 different technical concepts under consideration. Then, an American company, General Instrument, demonstrated the feasibility of a digital television signal. This breakthrough was of such significance that the FCC was persuaded to delay its decision on an ATV standard until a digitally based standard could be developed.

In March 1990, when it became clear that a digital standard was feasible, the FCC made a number of critical decisions. First, the Commission declared that the new ATV standard must be more than an enhanced analog signal, but be able to provide a genuine HDTV signal with at least twice the resolution of existing television images.(7) Then, to ensure that viewers who did not wish to buy a new digital television set could continue to receive conventional television broadcasts, it dictated that the new ATV standard must be capable of being "simulcast" on different channels.(8)

The new ATV standard also allowed the new DTV signal to be based on entirely new design principles. Although incompatible with the existing NTSC standard, the new DTV standard would be able to incorporate many improvements, including:

Progressive scanning, as explained below, is a more demanding technical format than the current "interlaced scanning" that will allow for a smoother sequencing of video picture frames and interactivity between computers and television sets.

Square pixels, or the most basic element of video image data, facilitate the interoperability of the new video standard with other imaging and information systems, including computers. With 1,920 pixels per line displayed on 1,080 lines per frame, the resolution of HDTV images is much sharper than that of the current NTSC format.

Increased frame rates allow a smoother simulation of motion in television signals; the more frames per second, the more realistic the portrayal of motion. The ACATS proposal allowed three different frame rates—24, 30, and 60 frames per second.

Additional lines per frame allow video images to be sharper in resolution. The current NTSC format provides for 525 horizontal lines of picture data; the HDTV standards provide for either 720 or 1080 horizontal lines.

Different aspect ratios give viewers a wider field of view, so that the viewing experience is more encompassing, in the manner of a film. In the existing NTSC format, the aspect ratio, or relation of the width to the height of the screen, is 4-to-3. In HDTV, the aspect ratio is a wider, more rectangular 16 to 9 aspect ratio, which is the same dimensions as 35-millimeter film.

Sound is more vivid in digital television, too, because there are five discrete channels of CD- quality audio, along with a sub-woofer channel for deeper sounds. Over time, DTV programming is likely to exploit these new capabilities.

Although these technical improvements would help make television programming more appealing, the overarching goal of the ATV standard, the FCC later stated, is to:

promote the success of a free, local television service using digital technology. Broadcast television's universal availability, appeal and the programs it provides—for example, entertainment, sports, local and national news, election results, weather advisories, access for candidates and public interest programming such as educational television for children—have made broadcast television a vital service.(9)

By adopting a uniform technical standard rather than leaving the outcome to marketplace competition, the Commission sought to ensure stability and continuity in the broadcast market. Television set manufacturers in particular wanted assurance that any digital television set would work and thus could be sold in all regions of the country.

The Advisory Committee on Advanced Television Service, which was hosting the competition for the best digital standard, decided to collaborate with the Advanced Television Systems Committee (ATSC), an industry group, to recommend a series of technical specifications. By early 1993, after a rigorous technical review of four digital HDTV standards and one analog proposal, this subgroup affirmed the superiority of digital over analog. Still, the ATSC subgroup found that each of the four digital proposals was deficient in some way.

This finding prompted the remaining seven ATV competitors to form a coalition, called the Grand Alliance, to pool their expertise.(10) Working with ACATS, the former competitors agreed in May 1993 jointly to develop a new, multifaceted standard that would incorporate the best of each system. By November 1995, after extensive testing at three laboratories, the ACATS formally recommended a set of prototype DTV protocols -- the Grand Alliance standards -- to the FCC. Key technical criteria in selecting the final standards were video/ audio quality, interoperability with other video delivery media, spectrum efficiency issues, and cost.

In May 1996, the FCC formally proposed adoption of the Grand Alliance standards for terrestrial broadcasting,(11) and in December of that year, it adopted them, with some modifications.(12) Neither cable nor direct broadcast satellite transmissions would be directly affected. The standards covered five major technical subsystems: scanning, video compression, audio compression, packetized data transport, and radio-frequency transmission. They included 18 distinct transmission formats, a compromise that satisfied the sometimes-conflicting interests of various industries (broadcasting, television set manufacturers, film studios, and computer and software makers) while ensuring great flexibility in how digital television could be used.

The final standard adopted by the FCC did not require a single standard for scanning formats, aspect ratios, or lines of resolution. This outcome resulted from a dispute between the consumer electronics industry (joined by some broadcasters) and the computer industry (joined by the film industry and some public interest groups) over which of the two scanning processes -- interlaced or progressive -- is superior. Interlaced scanning, which is used in televisions worldwide, scans even-numbered lines first, then odd-numbered ones. Progressive scanning, which is the format used in computers, scans lines in sequences, from top to bottom. The computer industry argued that progressive scanning is superior because it does not "flicker" in the manner of interlaced scanning. It also argued that progressive scanning enables easier connections with the Internet, and is more cheaply converted to interlaced formats than vice versa. The film industry also supported progressive scanning because it offers a more efficient means of converting filmed programming into digital formats. For their part, the consumer electronics industry and broadcasters argued that interlaced scanning was the only technology that could transmit the highest quality pictures then (and currently) feasible, i.e., 1,080 lines per picture and 1,920 pixels per line. Broadcasters also favored interlaced scanning because their vast archive of interlaced programming is not readily com- patible with a progressive format.

In the end, the FCC acknowledged but did not adopt any of the 18 recommended formats; broadcasters may choose the scanning format that best suits their needs. Of the 18 formats, 6 are HDTV formats—3 of which are based on progressive scanning and 3 on interlaced scanning. Of the remaining formats, 8 are SDTV (4 wide-screen formats with 16 to 9 aspect ratios, and four conventional 4 to 3 aspect ratios), and 4 are VGA (formats that are of lower quality than the current analog NTSC standard; VGA stands for Video Graphics Array Adaptor). A key rationale for adopting so many formats was to allow broadcasters to explore what works best for them in the marketplace. "We anticipate that stations may take a variety of paths," the FCC said in its April 1997 Fifth Report and Order on ATV.(13)

[S]ome may transmit all or mostly high resolution television programming, others a smaller amount of high resolution television, and yet others may present no HDTV, only SDTV, or SDTV and other services. We do not know what consumers may demand and support. Since broadcasters have incentives to discover the preferences of consumers and adapt their service offerings accordingly, we believe it is prudent to leave the choice up to broadcasters so that they may respond to the demands of the marketplace. A requirement now could stifle innovation as it would rest on a priori assumptions as to what services viewers would prefer.(14)

In this same report, the Commission also established a tentative 8-year transition schedule for moving from the current NTSC standard to DTV.


How Digital Television Will Evolve: The Plan

From 1994 to 1995, while ACATS wrestled with technical challenges and interindustry dis- agreements, Congress debated legislation that, on February 8, 1996, became the Telecommunications Act of 1996. This law was enacted to spur competition in the telephone and cable industries and to foster the development of new electronic media.

Section 201 of the 1996 Act specifies the basic terms under which digital television will move forward. Existing broadcasters are assigned a new DTV license and an additional 6 MHz channel to facilitate the transition from analog to digital television. They retain their original 6 MHz channel for analog broadcasts until the expected completion of the transition, at which time the channels are returned to the FCC.(15)

DTV licensees are granted great flexibility in how they use their new spectrum, provided that uses do not interfere with the provision of over-the-air television programming. DTV licens- ees are still bound by the public interest standards that apply to broadcast television. Finally, DTV licensees are to pay the Federal Government a fee for ancillary and supplementary (subscription) DTV services. In requiring fees for these envisioned services, Congress sought to ensure that broadcasters would pay approximately what they might have paid had the spectrum been auctioned, for any subscription services (as opposed to free over-the-air programming).(16) This way, the public would receive some portion of the value of the spectrum assigned to broadcasters. On November 19, 1998, the FCC adopted rules that require broadcasters to pay a fee of 5 percent of gross revenues received form ancillary or supplementary uses of the digital television spectrum for which they charge subscription fees or other specified compensation.(17) On the same day, the FCC issued a Notice of Proposed Rulemaking inviting comment on whether noncommercial broadcasters should be able to use their excess digital capacity for revenue-enhancing ancillary or supplementary services, and if so, whether they should be exempt from the 5 percent fee.(18)

In moving to a digital format, the FCC, broadcasters, public-interest organizations, and others agreed that it is important to ensure that free, over-the-air television remains universally available to the American people. The grant of free transitional spectrum to broadcasters for DTV was seen as a way to ensure that over-the-air television would continue to be universally available in the future. It was also meant to ensure that commercial broadcasting would remain competitive and that public broadcasting would remain a vital noncommercial venue. By giving broadcasters use of the airwaves until at least 2006, rather than auctioning the spectrum or charging a fee, the Federal Government hoped to ease the transition to digital television. Broadcasters would have time to make considerable investments in new digital equipment and make strategic and operational changes; television set manufacturers would have time to develop and improve new products and lower prices; and consumers would have time to buy new sets.

To help broadcasters meet the transition deadline of December 31, 2006, the FCC established an accelerated schedule for the introduction of DTV so that all Americans could have access to it by the year 2002.(19) Affiliates of the top four networks (ABC, CBS, NBC, and Fox) in the top-10 markets must have a digital signal on the air by May 1, 1999. The same network affiliates in markets 11 through 30 must be on the air by November 1, 1999. All other commercial stations must be on the air by May 1, 2002.

According to FCC Chairman William E. Kennard, at the beginning of November 1998, 42 stations were broadcasting digital television.(20) Thus, digital television signals will be available to more than one-third of television households in the United States by year's end, and the National Association of Broadcasters expects this coverage to rise to 50 percent by the end of 1999. Total DTV coverage for commercial stations is intended to be available by 2002.

When Congress passed the Balanced Budget Act of 1997, it specified that broadcasters will be permitted to keep their analog television service beyond 2006 under two conditions:

1. If one or more of the largest television stations in a market do not begin DTV trans- mission by the 2006 deadline through no fault of their own; or

2. If fewer than 85 percent of the television households in a market are able to receive digital television signals (either off the air or through a cable-type service that includes DTV stations). (21)


Challenges That Remain

The advent of digital television will bring remarkable, exciting changes to broadcasting. Consumers will have many more choices from broadcast television, from sharp high-definition television programming and multicasting of niche-audience channels to new information services and computer-interactivity. Broadcasters will have new opportunities to develop innovative programming and services, along with new revenue streams and market franchises. DTV will help broadcasting evolve and compete in the new media environment, while ensuring that public interest needs are still met through over-the-air broadcasting.

Still, resolving the issues that surround digital television will take time. The next section reviews some of the more significant issues that need to be addressed.

What Kinds of DTV Programming and Services to Offer?

Because of the inherent versatility of digital transmissions and the still-evolving terms of market competition, how broadcasters will use their digital signals is unclear. One of the first- threshold choices broadcasters must make is whether to transmit HDTV programming, multicast, datacast, or to employ some combination of the these.

A survey conducted by the Harris Corporation, a provider of broadcast and radio equipment, found that as recently as December 1997, 44 percent of broadcasters were not sure exactly what they would do with DTV programming.(22) Some 33 percent said they planned to offer multicasting; another 23 percent said they definitely would offer high-definition television. For those broadcasters who will use high-definition television, most plan to do so during primetime, but not during other times of the day.(23) Of the broadcasters who plan to multicast, 50 percent predicted they would offer news and regular network programming; 47 percent said they planned to transmit information services; and 26 percent planned to air local news and public affairs. Two of the more significant findings of the Harris survey were that broadcasters will move to local digital program origination faster than generally anticipated, and that they expect to offer more locally produced news with DTV.

Some observers caution that the ways in which DTV will interact with media markets will be highly unpredictable for many years. Although it is likely that multicasting will be economically feasible for some types of programs and dayparts, no clear models exist for attracting and keeping viewers tuned in regularly in a multicasting environment. Nor is it clear how interactive services will be treated under must-carry rules.

Questions remain on how much revenue the new channels -- whether HDTV, SDTV, or data -- can actually generate. Will broadcasters cannibalize their primary signals as they pursue new DTV opportunities, or will they expand their franchises?(24) Furthermore, anticipating the nature of DTV programming and services is made complex by the new competition among different media, especially cable, direct broadcast satellite, and the Internet. Digital television offerings may also be affected by new ownership patterns for television broadcasting, which in turn might blur the boundaries between once-distinct media. Some broadcasting experts speculate that information providers may see television stations as distribution vehicles for their data, which may encourage new corporate owners to acquire broadcast stations.(25)

Technical Issues

Only a few technical problems stand in the way of a full rollout of digital television. The broadcast and cable industries have agreed to channel numbering for virtual channels with multicasting.(26) A consensus standard for ensuring that DTV is technically compatible with cable television systems, through which 65 percent of Americans receive television programming, is still under construction.(27)

Investment Costs

The December 1997 Harris Corporation's survey of broadcasters suggested that the average cost to broadcasters of converting to digital would be in the vicinity of $5.7 million. This sum is "soft" in the sense that television stations that serve the larger urban markets will likely bear greater expenses than smaller stations. The timing of purchase of DTV equipment will make a significant difference as well. In addition, the kinds and amount of equipment that stations choose to buy for local origination of DTV programming can vary immensely. For all these reasons, previous estimates of DTV conversion costs of $6 million to $10 million per station are expected to decline rapidly, probably even faster than the 20 percent annual price decrease that now prevails.(28)

Consumer Demand for DTV

Another uncertain variable is how quickly consumers will see value in DTV programming and services, and choose to buy DTV sets. Perhaps the most significant factor here is the cost of DTV sets. Original projections by manufacturers indicate that the new television sets will cost between $1,000 to $1,500 more than conventional high-end projection sets, or about $4,000 to $5,000.(29)

The first high-definition television sets offered for sale in September 1998 were, however, priced at $8,000; about 100,000 are expected to be manufactured in 1998(30)-- out of a universe of more than 24 million conventional sets expected to be sold in 1998. A Samsung Electronics Company official estimates that HDTV sets will sell for $3,000 by the year 2002, considerably higher than the $500 or less that most Americans now pay for new television sets.(31)

But as new digital programming and services become more plentiful, it is expected that consumer demand for DTV sets will rise and set prices will decline.

Must-Carry Regulations

Before digital television becomes fully operational, several regulatory issues must be resolved. One of the most important is clarifying how the must-carry provisions of the Telecommunications Act will apply to digital television.(32) Historically, cable televisions systems have had to carry the signal of local broadcasters, as mandated by the 1992 Cable Act and affirmed in the 1997 Supreme Court ruling of Turner Broadcasting System, Inc. v. FCC ("Turner II").(33) The arrival of digital television transmission raises questions about how must-carry precedents should apply in the new television environment. Should cable systems be obliged to carry both the analog and digital television signals during the transition period, or only the analog signal, as they have under the existing must-carry rules? When cable systems do carry the digital signal, should they be obliged to carry the same amount of bandwidth as they currently do, even though that same spectrum may be carrying several programming channels and perhaps subscriber-based services? Do analog and digital broadcasts constitute separate "broadcasting stations" for the purposes of retransmission consent and digital broadcast signal carriage?

Resolving must-carry and retransmission consent requirements will affect the kind of access that cable households will have to digital television signals, what stations and channels are available over cable systems, and the rates that subscribers will have to pay. There is also concern about how must-carry rules in the new DTV environment might affect noncommercial video sources such as the Public Broadcasting System, and public affairs and public access cable channels. To help it address the must-carry/retransmission consent issue, the FCC released a Notice of Proposed Rulemaking on July 10, 1998, which proposes seven alternatives for implementing the must-carry provisions of the Telecommunications Act.(34)

Siting and Construction of DTV Towers

Another pending Notice of Proposed Rulemaking invites comment on whether Federal law should allow the preemption of local zoning rules to facilitate the siting and construction of digital broadcast towers.(35) This proceeding was initiated in August 1997 in response to a petition by the National Association of Broadcasters, which expressed concern that the local approval process for new towers could take too long and delay the introduction of DTV.(36)

Public Interest Obligations

Finally, one of the largest unresolved issues is what public interest obligations should govern digital broadcasters in the new media marketplace. In the Telecommunications Act of 1996, Congress specified that broadcasters would continue to serve as trustees of the public's airwaves and that public interest obligations should extend into the digital television environment:

Nothing in this section shall be construed as relieving a television broadcasting station from its obligation to serve the public interest, convenience, and necessity. In the Commission's review of any application for renewal of a broadcast license for a television station that provides ancillary or supplementary services, the television licensee shall establish that all of its program services on the existing or advanced television spectrum are in the public interest.(37)

Although Congress' general intent is clear, the substantive meaning of public interest obliga- tions in the new television environment is likely to change. To determine the precise contours of a DTV licensee's public interest obligations, the FCC plans to initiate a rulemaking in the near future. This process will be enhanced by understanding the historical development of the public interest standard in broadcasting, which is the focus of Section II of this Report. This is followed in Section III by the Advisory Committee's formal recommendations.

For all the challenges that remain, the opportunities to build a new, more robust broadcasting system have never been greater. The sheer technological capabilities of DTV offer sweeping possibilities for program creativity as well as for the increased competitiveness of broadcasting and public interest service. The most important task at hand is to devise the most appropriate structures to facilitate all these goals.


Endnotes

1) DTV is often referred to as "advanced television," or ATV. Because ATV embraces any enhancements to the existing television format (known as the NTSC standard, for National Television Systems Committee), ATV is a more inclusive term than "digital television" or "high-definition television." Once digital technology proved feasible and the most desirable technical standard for advanced television, the term DTV became virtually synonymous with ATV. See, e.g., In the Matter of Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, Notice of Proposed Rule Making, 6 FCC Rcd 7024 n.1 (discussing the definition of "ATV"). See also, Advanced Television Systems and Their Impact Upon the Existing Television Broadcast Service, Fourth Report and Order, 11 FCC Rcd 17771, 17773 (1996)(discussing the introduction of the term "DTV") (Fourth Report and Order).

2) Telecommunications Act of 1996, P.L. 104-104, 110 Stat. 56 (codified at 47 U.S.C. 151 et. seq.) (Feb. 8, 1996). This Act amended the Communications Act of 1934. See 47 U.S.C. §§ 336, 309(j) (1998).

3) 47 U.S.C. §336 (allowing the FCC to determine, with only general guidance, whether to issue additional licenses for advanced television services).

4) In the Matter of Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, Notice of Inquiry, 2 FCC Rcd 5125, 5126 (1987) (Notice of Inquiry on ATV) (discussing the evolution of the NTSC standard and noting that "the NTSC transmission standard has proven to be remarkably durable and adaptable to changes over the years").

5) In the Matter of Further Sharing of the UHF Television Band by Private Land Mobile Radio Services, Notice of Proposed Rule Making, 101 FCC 2d 852 (1985). See also Joel Brinkley, DEFINING VISION: THE BATTLE FOR THE FUTURE OF TELEVISION (1997).

6) Notice of Inquiry on ATV, supra note 4.

7) In the Matter of Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, First Report and Order, 5 FCC Rcd 5627, 5628 (1990).

8) Id.

9) In the Matter of Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, Fifth Report and Order, 12 FCC Rcd. 12809, 12820 (1997) (Fifth Report and Order).

10) The seven members of the Grand Alliance were AT&T (now Lucent Technologies), General Instrument Corporation, Massachusetts Institute of Technology, Philips Electronics North American Corporation, Thomson Consumer Electronics, The David Sarnoff Research Center, and Zenith Electronics Corporation. See Fourth Report and Order, supra note 1, at 17774, n.10.

11) In the Matter of Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, Fifth Further Notice of Proposed Rule Making, 11 FCC Rcd 6235 (1996).

12) Fourth Report and Order, supra note 1.

13) Fifth Report and Order, supra note 9, 12 FCC Rcd at 12826.

14) Id. at 12826-27.

15) The Balanced Budget Act of 1997 Act directs the FCC to auction the so-called analog spectrum in 2002. The spectrum may be returned to the FCC and reassigned as early as 2006. 47 U.S.C. § 309(j)(14)(A)-(C) (1998).

16) 47 U.S.C. 336(e)(2)(B).

17) Fees for Ancillary or Supplementary Use of Digital Television Spectrum Pursuant to Section 336(e)(1) of the Telecommunications Act of 1996, Report and Order, MM Docket No. 97-247. Adopted Nov. 19, 1998; Released Nov. 19, 1998.

18) Ancillary or Supplementary Use of Digital Television Capacity by Noncommercial Licensees, Notice of Proposed Rulemaking, MM Docket No. 98-203 (Nov. 19, 1998).

19) Fifth Report and Order, supra note 9, at 12840-41.

20) Remarks of William E. Kennard, Chairman, Federal Communications Commission to the "Dawn of Digital Television" Summit Meeting, Washington, D.C. (Nov. 16, 1998)(visited Nov. 18, 1998) (http://www.fcc.gov/Speeches/Kennard/spwek834.html).

21) Balanced Budget Act of 1997, Pub. L. No. 105-33 § 3003, 111 Stat. 251, 267 (1997). Some industry observers question whether the full transition to DTV and the return of analog spectrum will be consummated by 2006, as intended by the Balanced Budget Act of 1997. This view stems from doubts about consumer enthusiasm for DTV if sets are too expensive and, in turn, a likely triggering of the two contingency clauses adopted by Congress in 1997.

Based on existing projections of the market penetration of DTV over the next 8 years, many analysts believe it is unlikely that 85 percent of households will be equipped to receive DTV by 2006. Josh Bernoff, a principal analyst with Forrester Research, an independent market research firm based in Cambridge, Massachusetts, estimates that only 23 percent of U.S. households (nearly 20 million) will have DTV sets by 2004 and only 48 percent (42 million) by the year 2007. See Statement by Josh Bernoff, Forrester Research, Transcript of Meeting of the Advisory Committee on the Public Interest Obligations of Broadcasters, at 33-34 (Jan.16, 1998) (on file with the Advisory Committee Secretariat).

22) Statement by Bruce Allan, Vice President and General Manager of the Harris Corporation's Broadcasting Division, Transcript of Meeting of the Advisory Committee on the Public Interest Obligations of Broadcasters, at 16 (Jan. 16, 1998) (on file with the Advisory Committee Secretariat).

23) Id. The survey interviewed 401 television executives who represent approximately 480 stations. Id. at 12.

24) Statement by Josh Bernoff, to Advisory Committee on the Public Interest Obligations of Digital Broadcasters, supra note 22 at 79 (Jan. 16, 1998)("If you look at the fragmentation [of the existing TV marketplace], it's possible to imagine a world in which there's all of this wonderful programming. But if you look at the fragmentation that's happened so far with things like cable, a lot of what is available is reruns of prime time fare....Maybe we'll have the ability to see Three's Company at seven different times during the day, but I'm not sure that there's the capability to produce all of this original programming, given that the audience for the lepidoptery channel is not likely to be that large.").

25) Statements by Josh Bernoff, Forrester Research, and Robert W. Decherd, Chairman of A.H. Belo Corporation, to Advisory Committee on the Public Interest Obligations of Digital Broadcasters, Id. at 53, 82-84. If new permutations of ownership and blurring of media technologies do occur, some observers envision a rivalry between the personal computer and television, or perhaps a novel blending of the two media. Already, Intel and Zenith are collaborating on a digital TV decoder card for PCs, an innovation that could open up the PC market to digital television. Id. at 23. On the other hand, there are reasons to believe that PCs and TV will remain distinct media. The experience of interacting with a PC from a distance of 12 to 18 inches is quite different from relaxing in front of a TV screen, which is best viewed from 6 to 10 feet away (and even further for big-screen HDTV). And adding interactive features to TV programming would entail great expense, competition among several different technical protocols, and the absence of an established audience.

26) Id. at 20. Advanced Television Systems and their Impact upon the Existing Television Broadcast Service, Order on Reconsideration, MM. Docket No. 87-268 (Feb. 17, 1998) (affirming DTV channel assignments).

27) Letter from William E. Kennard, Chairman, Federal Communications Commission, to Decker Anstrom, President and CEO, National Cable Television Association and Gary Shapiro, President, Consumer Electronics Manufacturers Association (Aug. 13, 1998) (visited Dec. 7, 1998) (http://www.fcc.gov/Speeches/Kennard/Statements/stwek862.html) (urging that the cable industry, electronics manufacturers coordinate efforts to resolve compatibility problems between first-generation digital television sets and cable systems). See also Joel Brinkley, "FCC Wants HDTV Glitch Solved Soon," THE NEW YORK TIMES, Aug. 24, 1998, at D4.

28) Gary Arlen, Making the Transition: A New Kind of Television, A White Paper 19 (April 1998) (on file with the author) (predicting that new digital equipment may cost barely 20 percent more than today's comparable analog facilities, which suggests that the most cost-efficient way to proceed is scaled purchases of DTV equipment that parallel development of the market).

29) Joel Brinkley, "HDTV: High in Definition, High in Price," THE NEW YORK TIMES, (Aug. 20, 1998), at G1. 30) Id. 31) Id. 32 ) 47 U.S.C. § 534(b)(4)(B)(1998). See also In the Matter of Carriage of the Transmissions of Digital Television Broadcast Stations, Amendments to Part 76 of the Commission's Rules, Notice of Pro- posed Rule Making, 13 FCC Rcd 15092 (1998) (Carriage of the Transmissions of Digital Television).

33) Turner Broad. Sys., Inc. v. FCC, 520 U.S. 180 (1997).

34) Carriage of the Transmissions of Digital Television, supra note 32.

35) In the Matter of Preemption of State and Local Zoning and Land Use Restrictions on the Siting, Placement and Construction of Broadcast Station Transmission Facilities, Notice of Proposed Rule Making, 12 FCC Rcd 12504 (1997).

36) Id. at 12504, n.1.

37) 47 U.S.C. § 336(d)(1998).