Policy —

Don’t delay the digital TV transition

In this Ars guest op-ed, iSolon.org president and former fellow at Harvard's …


At the request of the incoming Obama Administration, leading members of Congress have drafted legislation to delay the digital TV transition for close to four months, justifying their action as a way to protect needy Americans from losing access to their local TV station programming. But is this the real reason for the delay?

In 2005, Congress passed legislation granting every American household the right to request up to two coupons (worth $40 each) to purchase a digital-to-analog TV converter box. The goal was to ensure that no household would lose access to their local TV station's programming after February 17, 2009, when those stations would have to stop transmitting analog signals over the public airwaves.

All Americans now have access to all or some of their local TV station's programming by subscribing to cable, satellite, or broadband Internet service. By law, all cable and satellite companies must carry local TV station programming on their networks. By law, too, all new TV sets sold in the last few years have had to include special tuners to pick up the digital TV signals broadcast terrestrially, over-the-air by local TV stations.

But some Americans nevertheless rely on analog, terrestrial, over-the-air reception to pick up their local TV stations. As of December 2008, approximately 6 percent of U.S. residences, including vacation residences, exclusively rely on such analog reception. Some of these households, like those belonging to Amish or Hasidic families, may own an analog TV but seek to watch it as little as possible. Some even believe that broadcast TV programming is harmful to their children. When my local member of Congress visited my child's elementary school during TV-Turnoff Week, he advised the kids to turn off their TV set and read a good book.

A key assumption behind America's digital TV transition policy is that individual Americans shouldn't be harmed by technological obsolescence even if that obsolescence is in the public interest. But why should the government subsidize a consumer's obsolete fifteen-year-old $100 color TV and not his obsolete four-year-old computer? Every communications industry has had to transition from analog to digital technology over the last few decades. Why treat the broadcasters' transition specially?

Special treatment

The most common answer is that the situation is different in this case because the government is mandating the transition. But imposing costs on Americans via government regulation and taxes—including mandated technological transitions— is as American as apple pie. When the government forced horses off the roads to make way for cars, it did not subsidize the horse owners. When, in the last few years, it forced the mobile telephone companies to transition consumers from analog to digital technology, it did not subsidize the owners of the obsolete analog handsets.

The same pattern holds in other democracies. When the model for the U.S. digital TV transition, Berlin, Germany, underwent its government mandated digital TV transition, the subsidy to analog TV set owners was restricted solely to the poor. Elsewhere, even that subsidy wasn't made. Finland, Sweden, and the Netherlands all completed their digital TV transitions by the end of 2007—and without any converter box subsidies.

What makes this particular technological transition different is the political power of America's FCC-licensed TV broadcasters and the money at stake.

The TV broadcast band occupies public airwaves worth more than $200 billion based on the auction receipts of comparable spectrum. Broadcasters' primary political strategy has been to use the digital transition to acquire additional rights to that spectrum free-of-charge. In 1996, for example, broadcasters were granted an interest-free loan of spectrum worth $70 billion.

The broadcasters' secondary strategy has been to hold the grossly underutilized broadcast spectrum hostage in exchange for many other valuable rights, such as government subsidies for TV converter boxes so their customers won't switch to the competition. Broadcasters have great political leverage because in return for freeing up public airwaves worth $50 billion, a few billion dollars to pay for digital TV converter boxes and other perks is chump change.

The broadcast lobby now claims that the digital TV transition will hurt the poor if not postponed. But four years ago it was the staunchest opponent of following Berlin, Germany's digital TV transition model, which limited the government's converter box subsidy program to the poor. Instead, it successfully insisted that everyone, including billionaires and those with prehistoric black-and-white TVs in their basements, should be eligible to receive two TV coupons per residence, including vacation homes. The result was that Congress allocated only enough money for the neediest to get the coupons, while compromising with the broadcasters to make everyone eligible to receive them. Broadcasters then blitzed the airwaves with $1 billion worth of ads encouraging the least needy to apply for the coupons, contributing to the current coupon shortage for the neediest. If Congress sets aside more money for digital TV coupons, this time the money should be directed to the poor, not billionaires.

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