[opendtv] Analysis: TV buying gets fuzzy as FCC and industry join to take viewers into the digital age

http://www.boston.com/business/globe/articles/2004/10/24/will_they_get_the_p=
icture?mode=3DPF

Will they get the picture?

TV buying gets fuzzy as FCC and industry join to=20
take viewers into the digital age

By Bruce Mohl, Globe Staff  |  October 24, 2004

Richard Kiley of Boston isn't a Luddite, but he=20
felt like one after a recent visit to his local=20
Best Buy store.

Kiley went into the store to purchase a new TV,=20
expecting to pay about $200 for a standard analog=20
television set. But his salesman pressured him to=20
upgrade to a digital TV costing nearly four times=20
as much.

"He tried every tactic he could think of," Kiley=20
said of the salesman. The superior sound and=20
picture quality were the first selling points.=20
When that didn't work, the salesman told him a=20
government-mandated transition to digital TV=20
would render the cheaper set useless in two years.

"He was adamant that it would be absolutely no=20
good," said Kiley, who walked out of the store in=20
a huff, wondering whether there really was some=20
government mandate forcing him to buy an=20
expensive TV set he didn't want.

No such mandate exists right now, but pressure is=20
building. Just as the Best Buy salesman steered=20
Kiley toward a digital TV, so, too, is the=20
government urging all consumers to go digital as=20
part of a wholesale shift to the new broadcast=20
technology.

The Federal Communications Commission, partnering=20
with TV manufacturers and retailers, recently=20
launched a educational campaign called "DTV --=20
Get It!" The federal agency is also requiring TV=20
manufacturers to include digital tuners in more=20
and more of the TVs they sell.

The ultimate pressure is the looming deadline for=20
digital TV conversion, a drop-dead date when=20
broadcasters will be required to turn off their=20
analog broadcasts and transmit digital signals=20
exclusively. At that time -- the current target=20
date is the end of 2006, but it's likely to be=20
pushed back to 2008 or 2009 -- consumers with=20
analog TVs will lose their service unless they=20
buy a digital TV or a converter box that would=20
allow them to continue using their existing set.

"It could be the greatest government-mandated=20
consumer expenditure of all time," said Bruce=20
Leichtman, president and principal analyst at the=20
Leichtman Research Group in Durham, N.H.

Cable and satellite companies should be able to=20
shield most of their subscribers from this=20
wrenching change, offering set-top boxes that=20
will keep the shows coming no matter what kind of=20
TV the customer has. But the estimated 17 million=20
households who get their TV free over the air=20
could lose service. These consumers, dubbed the=20
"last grannies" by some Washington insiders, are=20
at the center of a debate over how to complete=20
the transition to digital TV as quickly as=20
possible.

Many in Congress and at the FCC believe digital=20
conversion will never happen until the last=20
grannies are guaranteed uninterrupted service.=20
Some officials favor government subsidies or tax=20
credits of as much as $1 billion to help the=20
holdouts pay for digital-to-analog converter=20
boxes, which are expected to cost $50 to $100.=20
Some officials say the analog users should even=20
be allowed to use the subsidies to buy digital=20
TVs or cable and satellite subscriptions.

The whole process is incredibly confusing, and it=20
gets worse when you head into an electronics=20
store to look for a TV. Not only is there a=20
bewildering array of product choices, but=20
salespeople are not always up on the latest=20
twists and turns in Congress, and they often end=20
up giving misleading information.

Lee Simonson, TV business team director at=20
Richfield, Minn.-based Best Buy, said he "was=20
disappointed" that Kiley's salesperson gave him=20
misleading information. He said that salespeople=20
are given training on products as well as the=20
regulatory climate. "It's very confusing and not=20
definitive," Simonson said of the regulatory=20
climate.

Digital TV offers consumers richer sound and=20
crisper pictures. The ultimate digital format is=20
high definition, which offers more than twice as=20
much picture detail as an analog television.

Digital TV also offers broadcasters more=20
flexibility. In the same bandwidth it takes to=20
transmit one analog channel, digital compression=20
allows a broadcaster to deliver six standard=20
definition programs simultaneously or one=20
high-definition channel. The digital technology=20
also allows broadcasters to deliver data along=20
with a picture and even give it computer-like=20
functions that allow customers, for example, to=20
buy something they see on their screens or find=20
out more information.

Leichtman, the research analyst, advises=20
consumers who want to spend about $300 on a TV to=20
ignore the looming digital TV deadline and buy an=20
analog set. But if a consumer is interested in=20
spending more, Leichtman says, he should consider=20
upgrading to a high-definition digital TV. A=20
32-inch high-definition TV typically costs around=20
$1,000.

Despite its high price tag, consumers have=20
embraced digital TV technology fairly rapidly.=20
Digital TV sales are expected to jump nearly 59=20
percent this year to 7 million sets. The Consumer=20
Electronics Association estimates 11 percent of=20
US households now have a digital TV.

But the government wants the transition to=20
digital TV to go faster. Right now most TV=20
stations are broadcasting programs in both analog=20
and digital formats, but the government is eager=20
to reclaim the analog spectrum. It wants to use=20
part of the spectrum for public safety purposes=20
and auction off the rest to companies interested=20
in wireless broadband applications. The spectrum=20
is considered so valuable that the auction could=20
net $30 billion to $40 billion.

Congress originally selected Dec. 31, 2006, as=20
the date when analog broadcasts would be=20
terminated, but widespread acceptance of digital=20
television is unlikely by then. The FCC favors=20
pushing back the date until 2009, while a bill=20
nearing final passage in Congress would terminate=20
some analog broadcasts in 2008 and recover the=20
vacated spectrum for public safety uses.

In the meantime, the FCC is teaming up with TV=20
manufacturers and retailers to educate consumers=20
about digital TV, a collaboration that concerns=20
some academics and authors.

"I don't see a social purpose here. I see an=20
increase in what consumers have to pay," said=20
Juliet B. Schor, a professor of sociology at=20
Boston College.

Susan Linn, an instructor in psychiatry at=20
Harvard Medical School and the author of=20
"Consuming Kids: The Hostile Takeover of=20
Childhood," said she worries about the=20
interactive nature of digital TV and its=20
potential to make television an even more=20
powerful marketing tool.

"We sort of fall in love with technology and we=20
don't think about the ethical or social issues=20
involved," she said. "This is going to be a gold=20
mine for marketers."

Rebecca Fisher, a spokeswoman for the FCC, said=20
the agency is not promoting an industry or urging=20
consumers to buy more expensive TVs. She said the=20
agency is merely attempting to explain a mandated=20
directive from Congress.

"The true disservice would be for the FCC to=20
ignore the effect the transition will have on=20
consumers and let TVs turn dark on the day of the=20
transition," she said.

Bruce Mohl can be reached at mohl@xxxxxxxxxx 
  =A9 Copyright  2004 The New York Times Company
 
 
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