FERREE SET TO PRESENT DIGITAL TRANSITION PLAN TO BROADCASTERS

FCC Media Bureau Chief Kenneth Ferree plans to present his staff’s DTV transition plan next week to what’s expected to be an unsympathetic audience of broadcasters. Invited by the NAB to its annual convention in Las Vegas, Ferree joked with reporters at FCC hq Tues. that broadcasters “would rather eat their children” than release their “death grip” and give back the spectrum the govt. loaned to them. Nevertheless, he said he intends to lay out a scenario in which broadcasters would have to do so by 2009. Ferree said he expects to be pelted with tomatoes, among other things.

While the NAB says Ferree’s 2009 date is more realistic than 2006, NAB remains concerned that the Ferree initiative “is simply a spectrum reclamation plan that would strand both consumers and broadcasters” who have spent money embracing DTV, an NAB spokesman said.

Ferree said he has gotten enough positive feedback from commissioners to continue moving forward on the plan. “I think everybody recognizes the immense public benefits of doing this,” Ferree said, but adding that he has no guarantee of getting the required 3 votes for the plan. Although the Bureau hasn’t written up anything to present to the commissioners, the staff has briefed them once and plans to do so again, Ferree said. The plan, if approved by the commissioners, would be contained in 2 pending rulemakings -- a periodic review and another on digital carriage, he said. Presumably, the plan would be part of the reports and orders in those 2 items.

Ferree stressed that the FCC wasn’t trying to change anything about the DTV transition, noting that under current law the transition is to occur in a given market in 2006 or once 85% of the population is capable of receiving a digital signal. “The Commission has never before described what that 85% test is, what it means and when we know that it’s met,” he said. The bureau plan would count toward that 85% anyone who has a DTV set, as well as those who have digital-to- analog converters and anyone with a cable or satellite set- top box that can either downconvert or pass through a broadcaster’s digital signal.

Ferree acknowledged the bureau plan does nothing to resolve the issue of the estimated 15% of people who receive their broadcast signals over the air and whose sets would no longer work after the digital transition. He said there’s really nothing the FCC can do about that, that Congress contemplated that 15% when it passed the statute, and that Congress and the affected industries would be left to handle that part of the transition. FCC staff have been briefing staff on the Hill, he said.

On the mechanics of the plan and questions of dual must- carry, Ferree said he thinks most stations with a moderate degree of market power in Oct. 2008 would elect digital carriage for the Jan. 1, 2009, carriage election cycle. “The must-carry election would flip,” he said, so there would be no must-carry analog, but only must-carry digital. He said he believes market forces will lead cable operators to deliver those signals by providing all of their customers with set-top boxes or downconverting the signals. For middle tier broadcasters, this will “effectively be market-based dual carriage,” he said. Ferree said he thinks most cable operators will eventually say, “enough already,” and choose to fully convert to all-digital, rather than go through the rigamarole of downconversion or dual carriage. By Oct. 2008, Ferree said, he believes many more plug-&-play DTVs will be on the market and thus in people’s homes. “We're not forcing downconversion on anyone,” he said: “Broadcasters choose.”

Under the current scenario, “unless he’s an idiot” a broadcaster who’s in a weak leverage position would choose analog must-carry and downconversion to get to as many cable subscribers as possible, Ferree said. He said that under current rules, any broadcaster who wishes to turn in their analog license and just transmit in digital can choose to be carried in digital or downconverted to analog. Not moving forward with the transition, he said, would leave the U.S. far behind countries like Italy, Britain and Germany, where the transition is already well under way, and impede uses for vital wireless and public safety purposes.

The NAB said such a plan would “seriously” hinder the transition to digital and HDTV. The NAB questioned how allowing a cable operator to “degrade” a local broadcaster’s high quality HDTV signal into analog furthers the DTV transition. The NAB called Ferree’s plan a mockery of the industry and govt. partnership in advancing the DTV transition.

Asked about implications for multi-casting, Ferree said those decisions would be made later but he felt they would be far easier to make once these initial carriage questions are settled. Ferree noted that even if broadcasters were to get everything they wanted -- full dual carriage of a full signal -- the 15% problem would still exist.