Dueling letters over DTV hard date
| Read Shapiro's letter | Read Fritts' letter |
Just a couple of days ago, NAB President & CEO Eddie Fritts was praising Consumer Electronics Association President & CEO Gary Shapiro for the way NAB and CEA were cooperating on the DTV transition (5/11/05 TVBR #93), but now the two are at odds over DTV information being distributed on Capitol Hill. Fritts charges that a letter sent Wednesday by CEA to Rep. Joe Barton (R-TX), who is pushing legislation for a hard date for broadcasters to surrender their analog licenses, was filled with "wildly inaccurate claims." According to Shapiro, "The fact is that the percentage of American homes relying only on an over the air signal is low and shrinking." CEA claims its research finds that only 13% of American homes would be without TV service if the DTV cutoff occurred today. Nonsense, says Fritts, the government's own research shows that the number is actually 19%. He also struck out at CEA for backing a near-term hard date for the analog license surrender, while its own members continue to sell analog-only receivers - - with sales of 59 million analog-only sets projected for 2004-2008.
[SHAPIRO LETTER]
May 11, 2005
Dear Chairman Barton,
Thank you so much for your strong leadership on the digital television (DTV) transition. We believe you are doing the right thing for our nation in forcing the issue of a hard cut off date for analog broadcasting.
Both the debate and the actual setting of a firm date will have strong positive effects of moving this process along, publicizing the DTV transition, and freeing up the analog spectrum for more significant public safety and new technology uses.
We have provided some actual and projected data to assist your efforts.
Homes Relying Exclusively on Analog Over the Air Signals
In essence, the most important issue in cutting off of analog service is: who will be disenfranchised? Or, how many American homes will not receive a television signal on the cutoff date?
The fact is that the percentage of American homes relying only on an over the air signal is low and shrinking. While the vast majority of Americans receive local and network feeds via cable and satellite (and soon via telephone line, cellular, wireless broadband and the Internet), relatively few rely exclusively on a free over the air antenna signal.
If there is any doubt about this, consider the total lack of public outcry over the recent announcement that Monday Night Football will be soon available only to satellite and cable households!
Of the nearly 110 million American homes with at least one TV, 68% receive a cable signal and 22% receive a DBS signal. Our research shows that roughly 3% receive both cable and DBS. In total, 87% of American homes will have access to cable or satellite (and thus network and local feeds).
This means that if the cut off occurred today, less than 13% of the population of 110 million TV households would not have access to a broadcast signal through cable or satellite (though they could certainly start subscribing).
And this number is shrinking every year. Cable and satellite penetration continues to grow about one to two percentage points annually. Indeed, yesterday Sanford Bernstein said recent data suggest subscribers are growing 3.6 percent annually!
More, the number of non-subscribers only homes may be less relevant as broadband penetration grows. Broadcasters are increasingly providing their content through other means including the Internet and through cell phones. Just recently, Verizon announced that a deal where it would provide NBC's feed over its fiber network.
By the time of the actual cut-off -- combining present adoption trends for cable and satellite and forecasts for uptake of recently announced TV services from telcos like Verizon and SBC, as well as the change in purchasing likely to occur with a hard cut off date -- the number of American homes which would be cut off from any broadcast signal would be significantly less than 13%.
With respect to the people who have neither cable nor satellite, our research shows that this population's decision not to subscribe is generally not made for economic reasons. Instead, these are primarily people who do not watch a great deal of TV.
Those who do not subscribe to cable or satellite watch, on average 30% less television per week than cable and satellite subscribers. Nearly six of ten say television simply is not a high priority for them. Fewer than 30% indicate that insufficient funds play a role in their decisions not to subscribe to television.
But we must acknowledge that a small portion of the population will be adversely affected by an analog cut off. That is why we respect and understand your interest in creating a program whereby these viewers would have access to low cost digital-to analog converters.
However, given the rapid growth of alternative forms of media delivery, a government effort to ensure that every American has some type of service after the analog cut off will not be as widespread a challenge as some people believe.
Homes with Satellite or Cable
Broadcasters seek to make a large issue out of the unconnected analog TV sets in households that subscribe to satellite or cable TV. Broadcasters would have you believe that these sets are used extensively with antennas for watching over the air analog signals. In fact, primary viewing most often occurs on the TV that is connected to pay services. More often, the disconnected TVs are shunted to a less used room and hooked up with a DVD, VCR, or video game player. Indeed, our research shows these sets are used at least half the time for one of many alternate uses. More, as cable companies no longer have a monthly charge for additional outlets, this issue is irrelevant for the 68% of cable homes. In any event, with the analog cut off, these homes will not be disenfranchised, rather, they will simply purchase a D to A converter to continue receiving a broadcast signal, assuming they choose to do so.
Homes with Digital Televisions
Digital television has been adopted twice as quickly as color television. It took color television ten years to achieve 5% penetration from introduction; digital television products are already in 16 million American homes!
Broadcasters focus on the fact that most of these sets are not receiving an over the air signal. The fact is that the majority of these sets are hooked up to cable or satellite where increasingly, the signal is digital. Indeed, 3.5 million homes already have a television set with an integrated tuner or use a set top box to receive an ATSC signal. (Every DBS HD box also has an off-air DTV/HD tuner and is part of this calculation). We estimate that an additional 1.5 million homes are cable households who can receive DTV/HD broadcasts via cable. This means today that some five million American homes receive a DTV signal.
This estimate is consistent with our projections made in 1997 when Congress passed the law focusing on the 2006 deadlines. That same day in 1997 CEA issued a press release projecting that DTV penetration would only be 30% by the deadline. We recently had to scale back our overly optimistic DTV sales projections for 2005. We had based those projections on early FCC action on the tuner mandate petition and extensive promotion of cablecards, neither of which came to pass. We believe that 2005 DTV product sales will actually jump to 14.8 million units from 7.1 million units in 2004.
Future Sales Projections
To assist your focus on a hard cut off date, we are providing integrated DTV shipment estimates (meaning those sets with an integrated DTV tuner) for the next few years based on certain assumptions. Future projections are difficult as they are based on consumers making buying decisions which are affected by a range of factors we can't control, such as the economy, programming options, manufacturer offerings and government action. These forecasts assume the following:
1. Congress will Pass in 2005 a Hard cut-off Date for Analog Broadcasting. This is the most important factor, as setting any reasonable date will allow consumers to focus on the inevitable, allow manufacturers to include a warning label for analog sets that is tied to a clear date (manufacturers cannot do that now as the cut off dates are unclear). Further, this will allow strong publicity about the inevitability of the transition.
2. The FCC will Act Quickly on the CEA Petition to Eliminate the 50% Schedule and Accelerate the 100% Schedule to March 2006 on Mid-Size Television Sets (25 inches to 36 inches). Again, we recently scaled back our overly optimistic DTV sales projections for 2005. Our initial projections were based in part on early FCC action on the tuner mandate petition and more aggressive promotion and sales of cable card which in turn would drive sales of digital cable ready sets (which contain a tuner as dictated by the standard). Fewer sets with tuners will be sold if the FCC fails to act quickly on the CEA petition to remove the 50% rule OR imposes an earlier deadline for the inclusion of DTV tuners sets. Manufacturers have production cycles and respond to market demands and consumers and retailers are not demanding integrated sets.
3. National Groups for Local Broadcasters Will Continue to Do Little or Nothing to Promote Free Over the Air Digital Television. CEA has spent millions of dollars participating in home shows, with traveling media spokesmen, on brochures, on awards programs, and on creating and updating a website focused exclusively on helping people buy over the air antennas. Our antenna promotion website, www.antennaweb.org, receives 200,000 hits per month and promotes over the air broadcasting. Consumers face many choices and the free market decision to buy a more expensive TV with a digital tuner is a difficult one when broadcasters are quiet and consumers can get the service they want over cable or satellite. If broadcasters devote their considerable muscle to promoting free over the air digital television, then we would expect to see greater consumer interest in and sales of digital televisions with over the air tuners.
Given these assumptions, our sales projections for the next three years follow:
TV Market forecast
All data is in thousands
|
|
2004
|
2005
|
2006
|
2007
|
2008
|
Total
|
|
Analog only
|
23306
|
17657
|
11284
|
5254
|
1441
|
58943
|
|
ATSC Integrated Sets
|
1500
|
8857
|
16659
|
27011
|
32761
|
86788
|
|
DTV Monitors
|
6586
|
5945
|
5903
|
3925
|
3016
|
25375
|
|
Total TV
|
31392
|
32460
|
33847
|
36191
|
37217
|
171107
|
|
DTV Set-top Boxes
|
475
|
1676
|
3029
|
2763
|
2418
|
10362
|
An analog transmission cut off is important for our nation. But, it will have little practical impact on the viewing habits of the vast majority of Americans. As 87% of American homes do not rely on over the air signals for broadcast content, the impact and even the need for televisions with tuners is increasingly questionable.
Indeed, it is remarkable that the organizations of local broadcasters seeking to delay an analog cut off are the same organizations that have refused to educate the public on the existence, much less the value, of free over the air service. In short, while PBS and some local broadcasters have been exemplary in their educational efforts, the national broadcaster organizations have done almost nothing to promote to the public the value of free over the air broadcasting. Instead, they have used a "Washington only" strategy of delaying the cut off date and seeking restrictions on cable, satellite and TV set makers (and now they are going after telephone companies who provide video signals).
The public, not the broadcasters, owns this spectrum. The broadcasters now have twice the spectrum they were originally loaned, and they are clearly unwilling to give it up. The country needs this spectrum, and the 13% (see above) of American homes today (and fewer each year) who rely solely on free over the air broadcasting will understand that they have alternatives once a hard cut off date is set.
The needs of the many are too great, the spectrum is way under-utilized, and the stakes are high. We urge you to stay the course and impose a hard deadline and we stand ready to help you in this noble cause."
Gary Shapiro, President & CEO
Consumer Electronics Association
[FRITTS LETTER]
May 12, 2005
The Honorable Joe Barton
U.S. House of Representatives
2109 Rayburn Building
Washington, DC 20515
Dear Chairman Barton,
It has come to our attention that the Consumer Electronics Association recently sent you a letter in which CEA President Gary Shapiro dismissed the value of free, over-the-air television and made a series of wildly inaccurate claims. Please allow me to set the record straight.
CEA claims in its letter that "relatively few" Americans, or "less than 13 percent of homes," rely exclusively on over-the-air television.
Both of those claims have been refuted by professional staff of the non-partisan Government Accountability Office. As recently as Feb. 17, Mark Goldstein, Director of Physical Infrastructure Issues at GAO, testified before your committee that 19 percent of all American homes rely exclusively on over-the-air television.
The GAO's Mr. Goldstein testified that "roughly 21 million" homes in America are totally reliant on an over-the-air signal. That is more homes than are located in the states of Texas, Florida, Michigan, Mississippi, Montana, Alaska, and Hawaii, combined.
Perhaps CEA believes people who rely solely on over-the-air television reception are not important. If so, CEA should tell that to parents of more than 200 kidnapped children who have been rescued by Amber Alerts, an initiative launched by free, over-the-air broadcasters. Or CEA should tell that to victims of last year's Florida hurricane victims - many of whom credited weather alerts from local television stations with saving their lives.
Today, there are 73 million over-the-air television receivers not hooked to cable or satellite. CEA's cavalier dismissal of these viewers ignores the potential for consumer outrage if millions of people prematurely lose access to this programming. Moreover, disenfranchising huge numbers of Americans from access to local TV should not be based on misleading data from a trade group of offshore receiver manufacturers.
CEA's letter appears clearly designed to shift attention from its relentless effort to delay reasonable "DTV tuner mandate" rules established by the FCC. We're puzzled why TV set manufacturers continue resisting phased-in tuner mandate rules, given that the DTV transition will allow these companies to share among themselves the greatest transference of wealth in the history of consumer electronics.
It's common knowledge that each sale of an analog TV set only elongates the DTV transition. Yet astonishingly, CEA admits that its member companies intend to sell nearly 59 million analog television sets between 2004 and 2008.
In closing, let me address two myths surrounding the DTV transition. Myth One is that broadcasters are profiteering off of the DTV transition. The reality is that broadcasters have billions of dollars of stranded capital in this transition.
Myth Two is that broadcasters want to hold on to analog spectrum indefinitely. Nothing could be further than the truth. I can assure you that local TV stations have no interest in continuing to pay tens of thousands of dollars in extra utility bills each month to send two signals - one in analog and one in digital.
Mr. Chairman, let me assure you that broadcasters are committed to working with you in fashioning pro-consumer DTV legislation. We now have more than 1,500 stations on air with digital and high definition programming, and broadcasters are betting that DTV represents nothing short of a re-birth of over-the-air television.
We look forward to completing this historic transition, mindful that the interests of millions of Americans who rely on over-the-air broadcasting for compelling news, information and entertainment programming must be considered.
Sincerely,
Are you reading this from a forwarded email?
