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FCC OKs Plan to Introduce Digital TV in December

By Jube Shiver Jr. and Michael A. Hiltzik
Los Angeles Times
WASHINGTON

Federal regulators on Thursday gave formal approval to a plan awarding new licenses to owners of U.S. television stations so they can bring razor-sharp images, CD-quality sound and an array of new services to American viewers beginning in December 1998.

The decision by the Federal Communications Commission clears the way for the most important innovation in U.S. broadcasting since the introduction of color TV in the late 1950s.

But it also sets the stage for an epic battle between traditional TV set manufacturers like Sony Corp. and Zenith Electronics Corp. and the computer industry for dominance of the huge consumer electronic marketplace.

It also raises questions over whether the broadcasters are receiving what the public-interest group Common Cause calls a "$70 billion corporate welfare bonanza."

And it means that many of the nation's 280 million TV set owners will have to scrap those in favor of more costly digital televisions or buy special converters in order to receive the new signals.

Digital TV sets are expected to cost from $2,000 to $5,000 when they first appear on the market. Although their prices will probably drop sharply, they are likely to remain hundreds of dollars more costly than today's conventional analog sets. Converter boxes may cost only $100 per set, however.

The most immediate effect of the FCC decision is to hold the major broadcast networks to an earlier pledge to launch digital service at 23 of their owned-and-operated stations in the top 10 markets within 18 months. The rest of the network-owned stations in those markets must go digital within 24 months.

FCC Chairman Reed Hundt said Thursday that by Christmas 1999, about 53 percent of U.S. households will be receiving at least three digital stations.

Because the digital signal can be electronically compressed, allowing more data to be transmitted along the comparable bandwidth of the radio spectrum, broadcasters will be able to fit three to five channels on airwaves that now accommodate only one.

The digital signal can also provide distortion-free pictures and sound rivaling movies shown in theaters, as well as data such as that transmitted today among computers wired to the Internet.

That capability would allow broadcasters of sporting events, say, to deliver a stream of team or player statistics for viewers to call up during a contest.

One question is whether broadcasters will use the greater capacity to create a vaster wasteland. Hundt, for one, has publicly called for imposing higher public-service standards on digital broadcasters.

As for technical and financial issues, broadcasters say that some equipment needed for digital broadcasting has not yet even been designed. Conversion to digital format could cost $1 million to $3 million per station, according to Harris Corp., the leading manufacturer of digital equipment.

The logistics of converting to digital technology could pose an immense problem for some broadcasters, said Bob Weirather, director of TV products for Harris' broadcast division. In congested and contentious areas like New York City, he said, the logistics for overhauling transmission are so troublesome that broadcasters may have to shut down their analog signals for part of the day in order to install new digital towers.

"It's likely that there will be some delay in some places" in the changeover in equipment, he said.

The FCC's decision to give away the digital licenses rather than placing them up for auction is highly controversial because FCC officials have estimated that an auction could bring from $20 billion to $70 billion in bids.

The giveaway was opposed by Hundt, Sen. John McCain, R-Ariz., chairman of a subcommittee overseeing the telecommunications industry, and such public-interest groups as Common Cause. They observed, among other things, that the FCC rules require broadcasters to provide at least one free digital channel over the air but allows them to use the rest of their expanded channel capacity for other fee-based services, such as subscription TV and data services.

Supporters of the giveaway argue that it is necessary to subsidize the cost of analog-to-digital conversion and to preserve today's system of free, advertiser-supported over-the-air TV.

"I do not agree with those who say this is a free giveaway to broadcasters," said Commissioner Rachelle Chong. "This is a technology transfer. You just can't shut off analog TV" and start digital broadcasting.