POWELL QUESTIONS FUTURE ROLE OF OVER-THE-AIR TV

FCC Chmn. Powell expressed strong doubts about future importance of traditional over-the-air TV in nation where more than 80% of households rely on cable and satellite for their TV viewing. In news conference on TV issues at Commission hq Thurs., Powell said he didn’t see agency intervening much further in such marketplace issues as disputes over DTV standards and network affiliate practices because he wasn’t sure how most consumers were affected. With combined cable and satellite penetration seemingly on its way toward 90% of U.S. TV homes, he argued that such broadcasting industry battles were relevant to increasingly fewer viewers.

“I think there are real questions about the changing nature of TV,” he said, specifically referring to “its distribution, content and how it uses its slice of the digital revolution.” He said, for instance, that most early purchasers of DTV sets were “people who have dishes and cable,” not old-fashioned “rabbit ears” on their sets. “If 100% of Americans don’t get free, over- the-air TV, what are we protecting?”

While he “surely believes” that nation’s DTV transition “could be quicker,” Powell said he saw no “catastrophe” and virtually ruled out further major Commission actions to spur transition. He said “the really substantive issues are much more out there in the industry” or in Congress’s realm, such as current battles over digital broadcasting technical standards and copyright protection of digital programming. Although “classic approach” of “trade association world” is to blame govt. for any delays or other problems, he said, FCC already has done most of what it can to ease transition. “My own view is that I don’t think they're [transitions] going all that badly,” he said.

Powell repeated that govt. committed error by setting premature 2006 deadline for full switchover to DTV. Noting that it had taken VCRs 30 years to reach 85% penetration in U.S., he said no major new technology took root in just 10 years. This ambitious schedule, he said, contributes to general sense that DTV transition is lagging. “We made mistakes,” he said. “The timelines we set out for success are unrealistic.”

Asked specifically about technical tests of competing DTV signal standards, Powell said he saw no reason for FCC to intervene further. He said tests conducted so far hadn’t provided strong enough evidence for Commission to reverse itself on current 8-VSB modulation standard: “The problem with these tests is they never come out conclusively the way people want them to.”

As for broadcast-newspaper cross-ownership limits, which FCC plans to start reviewing next month (CD April 2 p6), Powell said “I'm pretty skeptical” about need for such continued restrictions. “It’s [cross-ownership rule] a hard sell,” he said. “I don’t know why there’s something inherent about a newspaper and something inherent about a broadcaster that means they can’t be combined.” Powell said agency would consider repeal as well as reform of rule. “I suspect there'll be support for a willingness to ask the [repeal] question,” he said.

Without commenting directly on FCC’s current interactive TV (ITV) inquiry, Powell all but ruled out any Commission rulemaking on subject. In general, he said, he sees no reason for govt. to regulate emerging market just because of some “pretty speculative anxieties” about how market might develop. “I am a very big skeptic about early government intervention,” he said. “I certainly wouldn’t support government intervention at this minute… That’s often when government is at its worst, when it’s trying to regulate phantoms.”

Instead of putting promising innovative businesses at risk by regulating them early, Powell said, he would rather hold off until market matures and problems develop. He contended that young technology markets, such as volatile dot-com market, could quickly punish industry leaders just as easily as they rewarded them. “I have a lot more confidence in postremedies,” he said. “I generally prefer to wait for clear evidence of abuse.”

On other issues, Powell said: (1) He had “doubts” about FCC’s ability to evaluate competition and concentration concerns extensively when reviewing media mergers because of other agencies’ greater expertise and Commission’s limited authority and resources. (2) FCC’s consideration of diversity concerns in mergers was “an easy thing to say but a much harder thing to do and do well,” as well as defend in courts. (3) Validity of court challenges to various industry ownership caps “depends on the court case and what argument is being made.” (4) FCC has “duty to defend” its judgments under previous chairmen even if he didn’t agree with those decisions. (5) He didn’t think ownership caps generally worked because govt. wasn’t very good at “calibrating market decisions” for long term.