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Subsidy for Converters Scrutinized

May 30, 2005  •  Post A Comment

Legislation to force broadcasters to switch to digital TV took a partisan twist last week, with leading House Republicans and Democrats butting heads over the best way to dampen the financial impact of the transition on consumers.

At issue is how large a subsidy lawmakers should provide to help consumers buy digital-to-analog converters to keep the 73 million analog-only TV receivers now in consumer homes from going dark on Dec. 31, 2008-the compromise date proposed for a flash-cut DTV switch in draft legislation released by the House last week.

Some House Republicans, led by Rep. Joe Barton of Texas, have made clear that they would prefer to limit the subsidy to the nation’s neediest households.

But fearing a consumer backlash, leading House Democrats want to subsidize converters for all analog-only sets.

“We must be prepared to protect all affected consumers,” said Rep. John Dingell, D-Mich., during House telecommunications subcommittee hearings on the draft DTV bill last week.

Rep. Barton, chairman of the House Energy and Commerce Committee, argued that consumers could save up the $50 that consumer electronics manufacturers estimate will be needed to buy a converter in 2008 by starting to put away 30 cents a week now.

In addition, Rep. Barton argued that pushing the deadline back from Dec. 31, 2006-the transition date he originally advocated-to Dec. 31, 2008, would give the industry and consumers more time to prepare for the transition.

“The need for a subsidy diminishes,” Rep. Barton said.

But Democrats said the auctions of the analog TV channels that broadcasters are supposed to return to the government when they make the switch to digital are expected to raise at least $10 billion-more than enough to subsidize converters for everyone who wants one.

“Don’t anger millions of Americans needlessly,” said Rep. Rick Boucher, D-Va. “There’s no reason to be stingy with this subsidy.”

“This bill will have a subsidy or the bill will be DOA,” added Rep. Bobby Rush, D-Ill.

At least one of Rep. Barton’s Republican colleagues also expressed qualms about the committee chairman’s plans during the hearings.

“Forcing people to spend extra money for their TV set just isn’t a good way to go,” said Rep. Barbara Cubin, R-Wyo.

Still, Rep. Barton vowed to move the DTV transition bill quickly-certainly in time for it to become law by year-end.

The lawmaker also said he is promoting fast action on the measure because revenues raised from analog TV auctions could help the committee meet its own budgetary obligations.

Despite the controversy over the subsidy, industry officials said the draft bill marks major progress because the Dec. 31, 2008, deadline has the support of House Republicans and Democrats.

“I would say that date is frozen,” Rep. Barton said.

Other key provisions in the draft bill would do the following:

  • Require cable TV operators that downconvert a must-carry TV station’s digital signal to analog to also provide the station’s digital signal to subscribers-and provide the signals of other must-carry stations to their customers under the same ground rules.

    Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, blasted the provision during the hearings last week, arguing that it would “impose an untenable burden on cable operators and programmers.”

    Mr. McSlarrow said the cable industry wants instead the right to downconvert to analog but the flexibility to decide whether to provide a particular station’s signal to its customers in digital or analog.

    But at the hearings, Manuel Abud, general manager of Telemundo’s KVEA-TV in Los Angeles, urged lawmakers to beef up the obligation to require cable operators to carry the signals of all stations in their market.

    “If a cable operator chooses not to provide an analog feed of any must-carry station’s broadcast programming, a Spanish-speaking analog cable subscriber likely will be left without access to Spanish-language broadcast signals unless they make substantial expenditures for set-top boxes or new digital television receivers,” Mr. Abud said.

  • As drafted, the bill would not require cable operators to carry all of the programming streams broadcast in digital-a sore point for broadcasters. At the hearings, Rep. Ed Markey, D-Mass., said he is unlikely to support a multicast provision unless broadcasters agree to meet “meaningful and measurable” new public interest obligations.

    Said Dennis Wharton, a spokesman for the National Association of Broadcasters, after the hearings: “There will be an explosion of all types of programming, including public interest programming, under a multicast mandate. We do have trouble embracing these one-size-fits-all programming dictates from Washington.”