Transcript (H)DTV and the Broadband Digital Migration

The DTV Transition in the US
Evan Kwerel
Senior Economic Advisor
Federal Communications Commission
[email protected]
JSICR International Communications Forum, Tokyo
November 7, 2003
Disclaimer

The opinions expressed in this talk are those of
the author and do not necessarily represent the
views of the FCC or any other members of its
staff
Evan Kwerel
The DTV Transition in the US -2-
Digital Migration
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All communications are going digital
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Video, voice and data
Wired and wireless
Analog World
Narrowband
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Transition
Digital World
Broadband
Importance of digital transition for broadcast TV
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More and better services for consumers/viewers
Efficient use of the spectrum
Evan Kwerel
The DTV Transition in the US -3-
Where we are: DTV Distribution
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Broadcast
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Cable
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1,230 DTV stations in operation (73% of total DTV allotments)
96% (114) of the 119 top-4 network affiliates in markets 1-30
77% (921) of remaining 1196 commercial stations
52% (195) of the 373 noncommercial and educational stations
60 million homes passed with HDTV service
DBS
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All digital format
Some HDTV
20.4 million subscribers
Evan Kwerel
The DTV Transition in the US -4-
Where We Are: DTV Content
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High definition
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Increasing HD content
Broadcast prime-time
 All major networks (Fox just committed)
Cable and satellite networks
 Sports (e.g., ESPN)
 Movies (e.g., HBO, Showtime)
 Original content (e.g., Discovery)
Multicasting

Some innovative broadcast DTV multicasting (e.g. PBS)
Evan Kwerel
The DTV Transition in the US -5-
Where We Are: DTV Equipment
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Cumulative US sales of DTV equipment (mid
2003)
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6.8 million
5.9 million
0.9 million
DTV sales small relative to analog TV receivers
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Total units:
DTV displays:
Tuners (Set-top boxes + integrated receivers)
25 million analog-only TV sets sold in US per year
250 million analog-only TV sets in US households
FCC ATSC Tuner Mandate – Adopted Aug. 2002
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Phase-in schedule
100% of sets 13” and larger by 7/1/07
Evan Kwerel
The DTV Transition in the US -6-
Key Pending Issues

Digital Rights Management
 Content
owners reluctant to make digital content
available without protection against unauthorized
copying and retransmission
 DRM critical to DTV penetration because digital
content (broadcast, cable, DBS, DVD) key driver of
DTV adoption
 DRM policy seeks to balance incentives for content
rights owners to produce and make available digital
content with benefits to consumers of copying and
sharing content
Evan Kwerel
The DTV Transition in the US -7-
Key Pending Issues

Digital Rights Management – FCC Actions
 “Plug
and play”
 Addresses DRM for pay TV content (cable and
DBS) as well cable-CE compatibility
 Maintains the “chain of custody” for encrypted
programming
 FCC adopted rules September 10, 2003
 “Broadcast flag”
 Seeks to limit Internet retransmission of digital
broadcast programming
 FCC expected to make decision shortly
Evan Kwerel
The DTV Transition in the US -8-
Key Pending Issues

Reclaiming TV spectrum
 Congress
set deadline for analog “switch off” at
December 31, 2006 unless household penetration of
DTV reception equipment is less than 85%
 When will household penetration of DTV reception
equipment reach 85% criterion? How will it be defined?
 Are there appropriate private incentives to reclaim
spectrum used for analog broadcasting?
Evan Kwerel
The DTV Transition in the US -9-
Lots of Spectrum Allocated to TV
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402 MHz of prime spectrum allocated to TV
broadcasting until 1997
294 MHz still allocated to TV (“core”)
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72 MHz in VHF band
222 MHz in UHF band (8% of spectrum in 300 MHz to 3 GHz
band)
FCC reallocated 108 MHz of TV spectrum after
passage of 1997 BBA (UHF Channels 52-69)
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24 MHz allocated for public safety (channels 63, 64, 68, 69)
6 MHz allocated as commercial guard band
30 MHz allocated for flexible use in upper 700 MHz band
48 MHz allocated for flexible use in lower 700 MHz band
Evan Kwerel
The DTV Transition in the US -10-
Reclaiming TV Spectrum
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UHF Channels 52-59 (lower 700 MHz band)
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UHF Channel 60-69 (upper 700 MHz band)
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94 analog TV stations
168 DTV stations
97 analog TV stations
20 DTV stations
How much loss to consumers if stations cleared?
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85% of households subscribe to cable or satellite. (But not all TVs in
household connected to pay services)
15% of households not subscribing to cable and satellite includes those
who place a low value on TV and have option of subscribing to cable or
satellite or buying a digital converter box
Content broadcast on a station’s other channel would still generally be
available over cable under must carry rules (w/ option of digital to analog
conversion)
Many stations on channels 52-69 have low viewership
Evan Kwerel
The DTV Transition in the US -11-
Reclaiming TV Spectrum Faster
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Congress could set a “date certain” for clearing
TV spectrum
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Accelerate clearing channels 60-69
 Mandate ending analog broadcasting on channels 60-69
 Broadcasters (15) with DTV allotments on channels 60-69 and
analog stations outside 60-69 would not be required to broadcast in
DTV until the end of the DTV transition, but could choose to.
 Broadcasters (5) with both an analog and DTV allotment on
channels 60-69 would be assigned replacement DTV channels
outside 60-69. This might require some broadcasters outside 60-69
to temporarily give up a DTV allotment or discontinue analog
broadcasting early.
Accelerate clearing channels 52-59
 Same idea as above, plus to provide replacement DTV channels
some broadcasters on channels 2-51 would need to temporarily
give up a DTV allotment or discontinue analog broadcasting early
Evan Kwerel
The DTV Transition in the US -12-
Reclaiming TV Spectrum Faster
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FCC may be able to develop an incentive-based
relocation policy for rapidly clearing channels 6069
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Voluntary clearing of channels 60-68
 Incumbents could continue to broadcast on their analog and
DTV channels until end of the DTV transition or they could
voluntarily negotiate a clearing agreement with the new
commercial overlay licensees.
 Subject to FCC public interest tests.
 Because of co-channel and adjacent channel interference,
overlay licensees would have an incentive to clear
broadcasters from all of these channels (60-68), including the
public safety channels.
Evan Kwerel
The DTV Transition in the US -13-
Reclaiming TV Spectrum Faster
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Possible incentive-based relocation policies for
rapidly clearing channels 60-69 (continued)
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FCC 2-sided auction (exchange)
 To reduce transactions costs under a voluntary clearing
procedure, the FCC might organize a two-sided auction
(exchange).
 Spectrum held by the FCC (overlay licenses) and agreements
to clear spectrum encumbered by incumbent TV stations
would be put up for bid simultaneously.
 Bidders would be able to make package bids for both FCC
overlay licenses and the right to clear incumbent TV
licensees.
Evan Kwerel
The DTV Transition in the US -14-
Reclaiming TV Spectrum Faster
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Possible incentive-based relocation policies for
rapidly clearing channels 60-69 (continued)
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Rules to encourage participation under a two-sided auction
(exchange) approach:
 FCC could make flexible use of spectrum occupied by
incumbents contingent on simple participation in the
exchange (must put clearing agreement up for sale but need
not actually sell).
 Or an even stronger rule would make flexible use contingent
on participation in the exchange and incorporation of the
incumbent’s spectrum into an overlay license either
• by the incumbent selling its clearing agreement to another
bidder who acquires the overlay license, or
• by the incumbent purchasing the overlay license itself.
Evan Kwerel
The DTV Transition in the US -15-
Reclaiming TV Spectrum Faster
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Possible incentive-based relocation policies for
rapidly clearing channels 60-69 (continued)
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Need mechanism (sharing formula or package bidding rules) to
allocate cost of clearing broadcasters that encumber more than
one overlay license
 Reduces free-rider problem – each bidder wants other bidder
to pay cost of clearing broadcaster that encumbers both their
overlay licenses, so may not clear when efficient to do so.
Evan Kwerel
The DTV Transition in the US -16-
Reclaiming TV Spectrum Faster

Possible incentive-based relocation policies for
rapidly clearing channels 60-69 (continued)

Mandatory FCC relocation of all TV stations on channel 69
(reallocated for public safety)
 FCC specifies relocation channels outside channels 60-69
 Mandate needed because 69 is not adjacent to any
commercial channel and thus clearing it provides no benefit to
any commercial licensees
 Legislative prohibitions against “short spacing” do not apply to
relocating TV stations occupying public safety channels
Evan Kwerel
The DTV Transition in the US -17-
Conclusion
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Digital transition for broadcast TV
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
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More and better services for consumers/viewers
Release spectrum for other uses
High priority for FCC and Congress
Remaining challenges include

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Digital rights management
Reclaiming spectrum quickly, efficiently and equitably
Evan Kwerel
The DTV Transition in the US -18-
ご清聴、
ありがとうございました
For More Information
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
Evan Kwerel
www.fcc.gov/dtv
www.fcc.gov/osp/workingp.html
OSP Working Paper No. 38
The DTV Transition in the US -19-