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The New Television: Give us some credit

Dec 16, 2002  •  Post A Comment

The General Accounting Office issued a report this month saying that more than 80 percent of Americans are either unaware or only “somewhat aware” of the transition to digital television signals.
This shouldn’t come as a surprise. If asked, more than 80 percent of Americans probably couldn’t name their state’s two U.S. senators. (Of course, they probably could name the entire cast of “Friends.”)
But federal officials, who know an opening when they see one, expressed shock and indignation at the survey results. Congress plans to sell the analog spectrum that will become available when TV stations convert from analog to digital. Lawmakers are counting on the money to help balance the budget. However, the digital transition may be years away unless more consumers start buying digital TVs to receive the new signals.
“If consumers are unfamiliar with DTV … they are less likely to purchase digital television sets,” said the GAO, the investigative arm of Congress.
The feds’ response is to force TV makers to add digital tuners to every television, starting with big-screen sets in July 2004. With widespread congressional support, the FCC approved the digital tuner regulation last August; TV makers are challenging the ruling in court.
But this regulation, if upheld, would essentially require consumers to buy a digital TV-at a higher price than a current TV. Manufacturers will likely bump up the prices of new sets to cover the expense of adding the tuners. Federal officials justify this “TV tax” by saying it’s in the national interest because the spectrum sale will eventually help reduce the deficit.
In short, the feds are tapping our wallets to help them control their spending. Leave it to the government to order you to do something-and then make you pay for it.
But I have a better idea.
If it’s so important that we convert from analog to digital, why not give everyone a $500 tax credit to buy a digital TV? Like other tax credits, such as the one for first-time home ownership, the DTV credit would be designed to encourage a behavior that is considered in our nation’s best interest.
This would be a fair-and smart-way to stimulate digital TV sales and awareness. It certainly beats the feds’ insistence on forcing consumers and TV makers to do all the dirty work.
Price and programming
The Consumer Electronics Association says only about 5 million homes will have a digital TV by year-end. At this rate, it’s hard to imagine that a large majority of Americans, much less everyone, will own a DTV by decade’s end.
Why?
Despite prices dropping under $2,000, the cost of a digital set is beyond the reach of most consumers, particularly the millions of people who are content with their current sets. Plus, most channels still do not produce shows in high-definition TV, the greatest benefit of owning a digital TV. Consequently, there’s not much incentive for people to buy one, which explains the federal government’s determination to force them to do so.
The $500 tax credit could remove both the price and programming barriers. With the credit, the real price of a low-end digital TV would be around $1,000, similar to what consumers now pay for the average big-screen television. I believe that the government-sponsored “discount” would immediately boost DTV sales, which would, in turn, encourage networks to produce more HDTV programming. And that would lead to even greater DTV sales.
The tax credit, which would be passed, of course, with great fanfare on Capitol Hill, would also increase positive awareness of digital TV. Always looking for a price break, particularly in this economy, millions of consumers would focus their attention on digital TV for the first time.
The credit might reduce federal revenues slightly, particularly in the short term. (Individual taxes would be lower.) But the loss would be more than made up because the government would be able to begin selling the analog spectrum sooner.
In addition, if the feds continue to focus exclusively on adding digital tuners to all sets, it could have a devastating impact on the electronics industry. Many Americans are already worried about losing their jobs and double-dip recessions. Add $200 or more to the cost of a set and some people will think twice about buying. And if that happens, the industry could take a fall, leading to more job cuts.
With hope, in the future, rather than mocking our lack of knowledge about digital TV, Congress will instead give us some “credit.”
Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.