[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
PREPARING CONSUMERS FOR THE END OF THE DIGITAL TELEVISION TRANSITION
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
MARCH 10, 2005
__________
Serial No. 109-5
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
U.S. GOVERNMENT PRINTING OFFICE
99-912 WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
James D. Barnette, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Telecommunications and the Internet
FRED UPTON, Michigan, Chairman
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida Ranking Member
PAUL E. GILLMOR, Ohio ELIOT L. ENGEL, New York
ED WHITFIELD, Kentucky ALBERT R. WYNN, Maryland
BARBARA CUBIN, Wyoming MIKE DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois CHARLES A. GONZALEZ, Texas
HEATHER WILSON, New Mexico JAY INSLEE, Washington
CHARLES W. ``CHIP'' PICKERING, RICK BOUCHER, Virginia
Mississippi EDOLPHUS TOWNS, New York
VITO FOSSELLA, New York FRANK PALLONE, Jr., New Jersey
GEORGE RADANOVICH, California SHERROD BROWN, Ohio
CHARLES F. BASS, New Hampshire BART GORDON, Tennessee
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE FERGUSON, New Jersey BART STUPAK, Michigan
JOHN SULLIVAN, Oklahoma JOHN D. DINGELL, Michigan,
MARSHA BLACKBURN, Tennessee (Ex Officio)
JOE BARTON, Texas,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Arland, David H., Vice President, Communications and
Government Affairs, Thomson Connectivity Business Unit, on
behalf of TTE Corporation.................................. 18
DeSalles, Lavada E., Member, Board of Directors, American
Association of Retired Persons............................. 9
Mirabal, Manuel, founder and Co-Chair, Hispanic Technology
and Telecommunications Partnership......................... 13
Roberts, Leonard H., Chairman and Chief Executive Officer,
Radioshack Corporation, on behalf of Radioshack, Consumer
Electronics Retailers Coalition............................ 26
Additional material submitted for the record:
Arland, David H., Vice President, Communications and
Government Affairs, Thomson Connectivity Business Unit, on
behalf of TTE Corporation, letter dated April 11, 2005,
enclosing response for the record.......................... 50
(iii)
PREPARING CONSUMERS FOR THE END OF THE DIGITAL TELEVISION TRANSITION
----------
THURSDAY, MARCH 10, 2005
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Telecommunications
and the Internet,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:11 p.m., in
room 2322 of the Rayburn House Office Building, Hon. Fred Upton
(chairman) presiding.
Members present: Representatives Upton, Shimkus,
Radanovich, Bass, Terry, Barton (ex officio), Markey, Wynn,
Gonzalez, Inslee, Boucher, Brown, and Dingell (ex officio).
Staff present: Neil Fried, majority counsel; Kelly Cole,
majority counsel; Will Nordwind, policy coordinator; Howard
Waltzman, majority counsel; Anh Nguyen, legislative clerk;
Johanna Shelton, minority counsel; Peter Filon, minority
counsel; and Turney Hall, research assistant.
Mr. Shimkus [presiding]. Let me call this hearing in order
and make a comment. Obviously, I am not Mr. Upton, the chairman
of the subcommittee. I am his evil twin ``Skippy''. No,
actually he is--we want to get the hearing moving rapidly,
because there will be a series of votes relatively soon, which
is going to cause--wreak havoc on the hearing, so we wanted to
get started. I would like unanimous consent that his opening
statement will be submitted for the record, Chairman Upton's,
and then I would like to yield to the ranking member of the
full committee, Mr. Dingell, for an opening statement.
[The prepared statement of Hon. Fred Upton follows:]
Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on
Telecommunications and the Internet
Good afternoon. Today's hearing is entitled: Preparing Consumers
for the End of the Digital Television Transition. How well consumers
are prepared for the end of the transition will be a significant factor
in assessing the success of our collective efforts to bring the DTV
transition to an end.
Under active consideration by this Subcommittee is enactment of
``hard date'' legislation. However, it is important to note that,
regardless of whether this Congress adopts such legislation, current
law envisions that those 15% of television households which rely solely
on over-the-air television service will lose their television service--
unless they take an affirmative step to acquire a digital-to-analog
set-top-box, purchase a television with a digital tuner, or subscribe
to cable or satellite. So, setting aside the debate over ``hard date''
legislation, even the implications of current law compel us to focus
significant time and attention on preparing the consumer for the end of
the digital transition. Of course, many of these consumers are lower
income, so we do need to consider some form of a digital-to-analog
converter box assistance program. Without a doubt, education is a
critical component of adequately preparing the consumer. All
stakeholders in this debate have an obligation to do their part in this
education campaign. Many such consumer education campaigns are under
way, and they are good campaigns. However, some suggest that, until we
set a ``hard date,'' such education campaigns are often lost on the
vast majority of consumers who likely are coping with a dizzying array
of more immediate issues in their lives. I tend to agree.
Moreover, even for those Americans who want to buy a new television
today, I can speak from personal experience that the decision over what
to buy and how it fits into the overall DTV picture is extremely
complex and confusing. Often these purchasing decisions involve sizable
amounts of money, although I would note that prices are coming down
every day, and today we will hear about Thompson's latest announcement
of a standard definition digital television for under $300. But even in
this context, more needs to be done to educate the consumer. This is
why I believe that, in conjunction with setting a hard-date, we must
consider requiring adequate warning labels on television sets to simply
and clearly educate the consumer about what it is they are buying and
what, if any, additional steps the consumer would need to take in order
to make it work post-transition.
I want to welcome all of our witnesses today as they help us
grapple with these important issues.
Mr. Dingell. Mr. Chairman, you are very gracious. Thank you
for the recognition, and thank you for moving forward with this
hearing. I want to commend you for the important work being
done here to address the problems of the transition from analog
to digital television. Few consumers know that this country is
in the middle of such a transition and that without new
equipment, their over-the-air television sets will go dark.
Today's hearing is critical for this subcommittee to
understand exactly what must be done to properly prepare
consumers for the transition ahead. Consumers deserve a clear
picture of how the digital television transition will affect
them, and unfortunately, they are not receiving that today,
nor, indeed, is industry. With different display technologies,
transmission formats, and connections, buying a television is
not as simple as it once was. Yet, our constituents need simple
answers for what they must do to continue to receive free over-
the-air television.
To provide these answers, both government and the private
sector must intensify their efforts in an unprecedented
campaign to educate consumers. Each industry has a role to
play. As our chairman, Mr. Barton, has indicated, he
experienced over the holiday season that consumers continue to
receive confusing or ambiguous information about what they must
do or how they will be affected when they go to a retail outlet
to purchase a new television. Retailers clearly must do better
here.
When consumers walk into a store, the necessary equipment,
including low-cost digital-to-analog converter boxes must be
stacked on the shelves. Consumers should see effective point of
purchase displays that inform them of the transition and
equipment functionality. Sales associates must accurately
answer consumer questions. I am particularly interested in
learning how retailers plan to market low-cost converter boxes.
I would also like to know whether retailers are coordinating
with broadcasters or others to publicize the transition in
local communities.
Consumer electronics manufacturers have an equally
important role in educating the public about their DTV
products. It is critical that DTV equipment, including
affordable digital-to-analog converter boxes, is available to
retailers in sufficient volume. I am curious to know when
manufacturers will produce and market low-cost converter boxes.
I also would like to know what steps manufacturers are
taking to label television sets and related equipment with
information about the change that will occur. Consumers deserve
accurate and appropriate information about the products they
are buying and about the future, how it will affect them and
whether the equipment that they have is going to work to get
them the services that they now enjoy.
The most critical piece of any consumer education campaign
will be the efforts of the broadcast industry itself. Broadcast
television is one of the most powerful mediums available to
reach consumers. Broadcasters should use it to inform their
over-the-air audience about this transition. And I see little
being done in that area. I expect to see local broadcasters do
much more to inform consumers about how to take part in the
benefits of digital television.
Cable and satellite providers do not get a pass. They have
a responsibility here, too. They must provide accurate and
appropriate information to guide their subscribers through this
process.
I am sympathetic to the predicament that without a firm
deadline it is difficult to inform consumers when this
transition will occur in their local market. We are all
committed to a timely completion of the transition. A hard
deadline may help to achieve this goal, but a hard deadline
must allow adequate time to properly educate consumers about
the transition and to ensure that they will have access to
affordable equipment. We simply can not afford to leave 21
million exclusively over-the-air television households without
the means to obtain local news, weather, and other information
upon which they depend each day.
Consumer adoption is the linchpin to a successful DTV
transition. Until we reach all Americans with accurate
information about the transition, there is no way we can
declare it a success.
I thank the witnesses for appearing here today. I look
forward to testimony from the AARP, from the Hispanic
Technology and Telecommunications Partnership on how particular
segments of our society will be affected and what we all need
to do to reach these audiences.
Thank you, Mr. Chairman.
Mr. Shimkus. I thank you.
And the Chair now recognizes the ranking member of the
subcommittee, Mr. Markey.
Mr. Markey. Thank you. I thank the gentleman from Illinois,
and I commend Chairman Upton for calling this hearing today.
And I commend you for anything that you had to do with this
hearing as well.
Mr. Shimkus. I just got it started.
Mr. Markey. And I commend everybody else who did anything
at all to make this the obviously entertaining hearing which it
is going to be.
Consumer education and awareness about the DTV transition
will be critical for the success of any plan that ends analog
television broadcasting. It is particularly troublesome that
more hasn't been done already to inform consumers about the
transition. Setting up websites with information is helpful,
such as the information that the FCC has put up, but we must
remember that the context in which that is happening. We are
talking chiefly about consumers who don't get cable, probably
don't subscribe to satellite service, either. We are talking,
according to the GAO, about some 20 million households who rely
exclusively on free, over-the-air television, half of whom have
household incomes of under $30,000 a year. In other words,
these are not likely to be people with computers at home
visiting the FCC website.
In addition, we must also keep in mind the shockingly high
number of consumers who continue to walk into stores every day
and to buy analog TV sets, sets which, to the credit of the
manufacturing industry, typically last 15 to 20 years. In 1997,
I offered an amendment in this committee to end the sale of
analog televisions by 2001. That amendment was defeated. But
the FCC, on its own, subsequently, belatedly, and only a couple
of years ago, put in place a staggered, dual analog-digital
tuner mandate so that consumers buying sets would be able to
receive digital broadcasts once analog TV ended. Yet this delay
in getting digital TVs into the market in an affordable way has
significantly hindered our ability to bring the DTV transition
to an orderly and timely conclusion.
For instance, last year alone, in 2004, the television
industry sold 31 million TV sets, just over 1 million of them
included digital tuners to receive digital TV signals. That
means that last year approximately 30 million TV sets were sold
that had only analog TV reception capability. Let me repeat
that. Last year, 30 million analog TV sets were sold. Those
consumers who bought them were unlikely to have been told that
the government intends, during the normal life of that TV set,
to end analog television broadcasts, and they certainly didn't
get any warning label to that effect in the box.
For example, my brother-in-law sent me a brand-new, 27-inch
analog TV set for Christmas in 2004. It still sits there with
obviously some difficult questions in my mind in terms of how
you ask your brother-in-law to get you a different TV set
because he didn't do a good enough job in understanding the
digital transition----
Mr. Shimkus. You just did.
Mr. Markey. [continuing] that is underway. Well, I will
tell you one thing about my brother-in-law, he has a life. As a
result, he does not watch C-Span, okay. So I have high
confidence that we are having this amongst that small group of
dedicated, get-a-life crowds that is obsessed with watching
Congressional hearings all day. And as--and so I am looking for
expert help today as to how to handle that sensitive family
discussion. Okay. And what those words might be with my
brother-in-law with that TV set, to be honest with you, which
still sits in a box in my house in Malden, Massachusetts, as I
wonder how to handle that issue. So I will be looking for
advice from everyone of our experts here as to how to handle
that situation, which I can then pass on to others who are
going to be similarly situated this whole coming year and all
of next year with this very same, very touchy social problem.
So this is a huge issue. There have been 48 million analog
sets that have been sold 2 years prior to the government's
originally targeted as the year for ending analog television
broadcasts. So even as we explore this possibility of warning
labels, we have to recognize that by the time any bill passes
containing that requirement, the bulk of the tens of millions
of analog sets for which such labels are most necessary have
already been sold.
And so we have a very important hearing that we are having
today, Mr. Chairman, and I thank you for conducting it.
Mr. Shimkus. The gentleman yields back his time.
The Chair recognizes the gentleman--oh, excuse me. Does the
gentleman from Nebraska have an opening statement?
Mr. Terry. Yes. I buy my relatives----
Mr. Shimkus. The gentleman is recognized----
Mr. Terry. [continuing] books.
Mr. Shimkus. Do what?
Mr. Terry. I said I buy my relatives books on the Boston
Red Sox.
I just--this is an important hearing, because we need to
move the digital transition forward, but we don't want to
disenfranchise people from their TVs. Now I have gone on the
rotary circuit talking about the digital transition and the
necessity for the government to take back that analog spectrum
and how it--you know, the applications of that are so important
to national security, homeland security, first responders, and
just consumer convenience that we are seeing with the EN4G
electronic gadgets that are already coming out that, as a
gadgeteer, I think are really neat.
But we need to move this forward. But we--again, we have to
find that right medium, I guess the new phrase is that tipping
point, where we protect those that are the most vulnerable in
this process, but continue to move forward.
So I appreciate all of our witnesses being here today to
give us their insight and their help in this process.
Thank you.
Mr. Shimkus. The gentleman yields back his time.
The Chair recognizes the gentleman from Virginia.
Mr. Boucher. Well, thank you very much, Mr. Chairman.
I simply want to urge a note of caution and urge the
members of this subcommittee and our full Committee on Energy
and Commerce to proceed very carefully before we make any
decisions to change the current mechanism and mandate a hard
date for return of the analog spectrum.
We are told that there are 73 million analog television
sets that rely on over-the-air reception. These sets are not
connected to cable; they are not connected to satellite. It is
clear beyond debate that the imposition of a hard date for the
surrender of the analog spectrum would strand these 73 million
television sets. These owners will be extremely angry if we
render their sets useless and then expect them to purchase a
converter box for somewhere between $50 and $125 in order to
put the sets back into service. In some respects, television
reception has become a new third rail of American politics.
I am sure we all remember the furor that was touched off
several years ago when there was a threatened interruption of
receipt by satellite of distant network signals. We all
received thousands of cards and calls and e-mail
communications, and we responded rather quickly by
reauthorizing the Satellite Home Viewer Act. If we impose a
cost of between $50 and $125 on the owners of 73 million
television sets, you can well imagine the public wrath that is
going to be visited on every one of us. The distant network
signal flare-up is going to look quaint and mild by comparison.
And I would suggest to my colleagues that you shouldn't
think for a minute that we are going to be able to make that
transition on the cheap. Anything less than supplying a
government-funded converter box for each one of these 73
million sets is going to set off that predicted public furor
and at $100 per converter box, the cost is going to be $7.3
billion. The low end of the estimate of the revenues to be
derived from the public auction of the returned analog spectrum
is about $4 billion, and that is $3.3 billion less than the
cost of buying the converter boxes. The math is daunting. The
public reaction to anything less than full funding for
converter boxes is certain, and I urge the members to keep
these realities firmly in mind as these hearings continue. A
realistic alternative would be simply to leave the current
transition mechanism in place.
Thank you very much, Mr. Chairman.
Mr. Shimkus. The gentleman yields back his time. The
gentleman is correct. One of the few places when you--someone
yells out in a local parade in Pike County, Illinois, rural
Illinois, I want my local channels, someone who has lived in
that environment, and so you make a very valid point about the
response will be out in the public if we don't--if we are not
careful.
The Chair now recognizes the gentleman from Ohio.
Mr. Brown. Thank you, Mr. Chairman.
I certainly like the look of digital, as all of us do, and
I--when I look at the comparison over there and see the analog
picture, understanding that picture looks worse than the
picture at my house, and I have a short antenna 50 miles from
Cleveland, so I don't know that that exactly doesn't--anyway,
so----
Mr. Shimkus. It is the building.
Mr. Brown. It is the building. Okay. It is the building.
Thanks to our witnesses for joining us this afternoon. The
transition to digital television will affect virtually every
household in the U.S. According to the census, 98 percent of
homes have televisions while only 95 percent of homes have
telephones. So we consider setting a deadline, it is essential
that we provide information assistance to those who have the
fewest resources, as Mr. Boucher said. Consumers continue to
purchase analog sets, unaware of the looming transition,
ensuring consumers have access to clear, concise information on
how the transition will affect them could not be more
important, and no matter what deadline is set, we need to do
that soon. We must also ensure that consumers have the ability
to access digital TV. In Ohio alone, over 900,000 homes rely
solely on over-the-air broadcasting, many of these, as Mr.
Markey said, are low-income households that can't afford to
purchase a new television set or new set-top box. How are we--
the question is, how are we going to ensure that homes are not
left behind?
Thank you, Mr. Chairman.
[The prepared statement of Hon. Sherrod Brown follows:]
Prepared Statement of Hon. Sherrod Brown, a Representative in Congress
from the State of Ohio
Thank you, Mr. Chairman and thanks to our witnesses joining us this
afternoon.
The transition to digital television will affect virtually every
household in the U.S. According to the census, 98 percent of homes have
televisions while only 95 percent of homes have telephones.
As we consider setting a deadline for the transition, it is
essential that we provide information and assistance to those who have
the fewest resources.
Consumers continue to purchase analog sets, unaware of the looming
transition.
Ensuring consumers have access to clear, concise information on how
the transition will affect them could not be more important, and no
matter what deadline is set, this must be done soon.
We must also ensure that all consumers have the ability to access
digital television.
In Ohio alone, over 900,000 homes rely solely on over-the-air
broadcasting. Many of these are low-income households that cannot
afford to purchase a new television or a set-top box.
How are we going to ensure these homes are not left behind?
Mr. Shimkus. The gentleman yields back his time. Does the
gentleman from Texas wish to give an opening statement? The
gentleman waives.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Cliff Stearns, a Representative in Congress
from the State of Florida
Thank you Mr. Chairman for holding this important hearing.
It is undeniable that the benefits will be immense when we finally
complete the transition to Digital TV. Our public safety will improve,
auctioning of the spectrum should bring in billions to the federal
treasury, and it will help promote emerging wireless technologies so
that Americans will continue to reap the benefits of the communications
revolution.
And of course the quality of television-viewing will improve
dramatically as American consumers switch from analog sets to digital
televisions.
But as we make this transition, we must make sure that American
consumers--our constituents--are not left in the dark when we finally
do turn off the analog spectrum.
As of today, we estimate that millions of Americans are not ready
for the digital era. These numbers cannot be underestimated or ignored.
That's why this hearing and other hearings that the Chairman has
held or will hold in the future on this issue are so important.
Congress must play a prominent role in helping make the transition as
smooth and as convenient as possible for the American people.
Hopefully this hearing will help to continue to raise consumer
awareness about this issue and provide us with some answers. I
appreciate witnesses like AARP and the Hispanic Technology and
Telecommunications Partnership coming here to explain how the people
they represent are prepared or not prepared for the transition, and I
look forward to hearing what the consumer electronics industry is doing
or not doing to help accommodate the transition.
Thank you Mr. Chairman, and I yield back the balance of my time.
______
Prepared Statement of Hon. Paul E. Gillmor, a Representative in
Congress from the State of Ohio
Thank you, Mr. Chairman, for the opportunity to again discuss the
DTV transition. I am pleased that our panel continues to be pro-active
concerning this important matter.
In order for a consumer to make the transition from analog to
digital television, conversion set-top boxes are available for purchase
in selective retail outlets nationwide. However, they still need to be
made more widely available, and more importantly, at a cheaper price.
Currently, when confronted with the decision of whether to buy a DTV
conversion box costing hundreds of dollars, a typical patron is likely
to either hold off until the boxes go down in value, or continue to
delay their decision until they can cough-up enough extra cash to take
home a digital television set, leaving their old TV box-less, but
otherwise in perfect working order.
Consumer education is just as important in preparing consumers for
the digital television world. From my experience, while many have heard
about digital television by either watching TV or browsing their local
electronics store for a set with the best picture, about just as many
of them are not even aware of the transition deadline, its possible
implications, or even what DTV actually is.
Furthermore, while the number of homes with digital capability is
on the rise, in part due to its popularity, recent decrease in cost,
and FCC requirements, today I am eager learn how we can better
contribute to accelerating the current figure and encourage all parties
involved in delivering such services to continue to educate the public
with us, ultimately making the DTV transition a reality.
I welcome the well-balanced panel of witnesses, look forward to
their testimony on this important issue, and again, thank the Chairman
and yield back the remainder of my time.
______
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Thank you, Mr. Chairman.
I appreciate your continued engagement on issues surrounding the
Digital Television transition. This is our fourth hearing in the past
two years on this topic, and as I look at my calendar and see that we
are nearly in the second quarter of 2005, the date of December 31, 2006
seems just around the corner. We need to eliminate the uncertainty of
this process.
I don't think anyone on this Committee, or anyone who has testified
before us on this matter doubts the benefits of a completed DTV
transition. Higher quality picture, value-added content and more
reliable over-the-air reception are just the tip of the iceberg. Of
particular interest to me and others on this committee is the
reallocation of precious spectrum for advanced wireless services which
will lead to increased competition and consumer choice in the
telecommunications marketplace.
What's become clear through these hearings is that this transition
is not going to be so simple. We have identified an estimated 16
million households that receive television signals over the air and
will be unable to view the new digital programming when the transition
occurs without a digital-to-analog converter on their set. What's also
clear is that no Member of Congress wants to be responsible for a blank
television screen. What's also helping to muddy the picture is how
promptly the DTV channel election process is proceeding. If
broadcasters aren't up in digital by the end of 2006, they will be off
the air no matter how many sets can receive digital signals.
We know what the challenges are and we know the benefits of this
transition. Now we need to work together to ensure there is adequate
education and expectations in place to make this happen.
I look forward to hearing from our panel on this important matter
and want to continue our dialog as we take the next steps in this
transition.
I yield back the balance of my time.
______
Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
and Commerce
Thank you, Mr. Chairman, for holding this hearing on preparing
consumers for the end of the DTV transition. Consumer education will be
essential to finishing the DTV transition. Only if consumers understand
their options can they prepare and make rational choices based on their
economic circumstances and entertainment preferences.
The question before us is how to achieve the smoothest outcome for
a transition we all know is coming. Is it wiser to sit back and wait
for television sets to go dark, or plan for the change? This hearing is
the next step in a full and open dialogue on these issues. At the end
of the day I hope we can enact a bipartisan plan to foster new
innovation in video programming while easing the digital transition for
those who need our help.
If we pass legislation along the lines I have been describing since
becoming Chairman, I believe that the vast majority of consumers will
need to take no action. Indeed, the more than 90 million households
relying on cable, satellite, or digital over-the-air service will see
the same pictures the day after the hard date as they saw before.
Other consumers, however, will need to obtain a digital-to-analog
converter box, a digital tuner, or cable or satellite service. They
will also need to know whether they qualify for the digital-to-analog
converter box program, and how to participate.
These households will be faced with the very same choices if we
take no legislative action because of the 85-percent penetration test
in the current law. Without my proposed hard deadline legislation,
however, there will be no converter-box program to help these consumers
continue to use their analog televisions.
The good news is that the education efforts have already begun. The
FCC, broadcasters, cable operators, satellite operators, electronics
manufacturers, retailers, and consumer groups have started sponsoring
events and promotions, running advertisements, distributing materials,
and creating web sites. Once we set a hard-date, this education effort
will increase exponentially. The certainty of a DTV transition date
will give all industry participants strong incentives to inform
consumers of their options. In many cases, those incentives will be
financial, as there will be revenue to be preserved or made depending
on the choices consumers make.
I look forward to the testimony of our witnesses. I thank them for
appearing, and yield back.
______
Prepared Statement of Hon. Eliot Engel, a Representative in Congress
from the State of New York
Mr. Chairman: I think it is a sign of the importance of this topic
that we are again having a hearing on the transition to digital
television.
I am very appreciative of this hearing's topic because I believe
the lack of consumer education remains the greatest barrier to a
successful transition.
I was an early advocate of requiring digital tuners in new
televisions. I was also an early advocate of better educating the
consumer about their options.
We have made some modest progress on the tuner mandate-- but I
believe we are still woefully behind on consumer education.
We, the members of this subcommittee, know the benefits that will
accrue to the nation--more spectrum for different uses, more money in
the treasury and better TV pictures as the Mets beat the Cubs!
But, without widespread consumer adoption, this exercise will all
be for naught.
I am interested in what all sectors are doing--and studying ways
that the federal government can assist in educating the public.
Now, I am not advocating that we undertake a propaganda campaign--
that could get us in even more trouble! But, since it was Congress who
set us on this path, I believe we have a responsibility to be a partner
in the education of our citizens.
I look forward to hearing from our witnesses and working with all
of my colleagues on moving forward with the digital transition.
Mr. Shimkus. We want to thank our panel for being here.
Your opening statements are all in the record. We would like
for you to summarize.
And we would like to start with Mrs. Lavada DeSalles,
Member of the Board of Directors of the American Association of
Retired Persons. We welcome you, and you have the floor.
STATEMENTS OF LAVADA E. DESALLES, MEMBER, BOARD OF DIRECTORS,
AMERICAN ASSOCIATION OF RETIRED PERSONS; MANUEL MIRABAL,
FOUNDER AND CO-CHAIR, HISPANIC TECHNOLOGY AND
TELECOMMUNICATIONS PARTNERSHIP; DAVID H. ARLAND, VICE
PRESIDENT, COMMUNICATIONS AND GOVERNMENT AFFAIRS, THOMSON
CONNECTIVITY BUSINESS UNIT, ON BEHALF OF TTE CORPORATION; AND
LEONARD H. ROBERTS, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
RADIOSHACK CORPORATION, ON BEHALF OF RADIOSHACK, CONSUMER
ELECTRONICS RETAILERS COALITION
Ms. DeSalles. Thank you.
Good morning, Mr. Chairman, and members of the
subcommittee. Thank you for this opportunity to testify today
on behalf of AARP regarding a timely and important consumer
issue.
Again, my name is Lavada DeSalles, and I am from
Sacramento, California, and I am a member of AARP's Board of
Directors. My remarks this morning will focus on the impact on
older Americans of the transition from over-the-air broadcast-
only television to digital TV.
Since the first public demonstration of television in 1935,
consumers have had a growing reliance on television technology.
Today, television offers more than just entertainment. It
provides consumers with life-saving weather forecasts,
information on government, politics, and community news. For
the older Americans that AARP represents, television can be a
primary connection to the outside world. In fact, Americans age
50 and above watch the greatest average number of hours of
television a day, almost 5.5 hours.
Digital technology is the greatest transformation that
television service has experienced since the advent of color
television 50 years ago. It offers consumers better quality
transmission and a wider range of programming options.
However, there are also significant costs associated with
the transition to digital TV. The transition will place
millions of consumers at risk of losing their television
service entirely and will require them to purchase additional
equipment in order to continue to enjoy a service they have
been receiving for free. Consumers with over-the-air broadcast-
only television service will need to purchase and install a
converter box. According to a 2004 survey, about 21 million
consumers rely on over-the-air broadcast-only television and a
recent GAO report states that of these, 48 percent have incomes
under $30,000. According to the report, non-white and Hispanic
households are more likely to rely on over-the-air television
than our white and non-Hispanic households. Of the 21 million
over-the-air consumers, 8.6 million include at least one person
over the age of 50, and millions of them are on fixed incomes
and/or are in lower income brackets.
So we urge Congress to consider the health and welfare of
these consumers and arrange an assistance program that is
directed toward those that are greatest in need. An important
first step to alleviate the negative impacts of the transition
is to educate the general public well in advance of the date
when the transition will be complete. AARP recommends that a
comprehensive educational plan be implemented at least 1 year
before the transition occurs, and suggests several steps to
take to accomplish this objective.
First, PSAs for television and radio should be developed,
perhaps by the FCC, to inform consumers that on the date
determined, over-the-air broadcast-only television sets will
not work unless certain steps are taken. PSAs could display a
toll-free telephone number for consumers to call and receive
more detailed information.
Second, a mail insert detailing the transition and
providing the necessary consumer information should be prepared
and sent in a government mailing received by the widest range
of consumer populations.
Third, the FCC should expand its outreach plans and prepare
consumer-friendly materials to be distributed at libraries,
community centers, and other public places.
Fourth, any commercial place of business selling television
sets should be required to inform consumers of the transition.
Consumers should know that purchasing an over-the-air,
broadcast-only television set will require yet another expense
to adapt to digital TV.
Finally, AARP commits to doing our part to educate our
members about the transition. AARP has several communication
tools that can be used to pass on critical information to our
members and others. AARP will be pleased to work with Congress
and the designated Federal agencies to help design the most
effective plan to educate and assist consumers with the digital
television transition.
Thank you very much for this opportunity to present AARP's
views on this very important matter, and I would be happy to
answer any questions you may have later.
Thank you.
[The prepared statement of Lavada E. DeSalles follows:]
Prepared Statement of Lavada E. DeSalles on Behalf of AARP
Good morning. Mr. Chairman and members of the Subcommittee, thank
you for this opportunity to testify today, on behalf of AARP, regarding
a timely and important consumer issue, the transition from analog to
digital television. My name is Lavada DeSalles. I'm from Sacramento,
California and I am a member of AARP's Board of Directors.
My remarks this morning will focus on four critical issues
concerning the impact of the digital television transition on older
Americans:
1) Consumers, particularly older Americans, increasingly rely on the
essential service television provides in the home;
2) While digital television offers benefits for consumers, there are
also significant costs to consider in the transition from
analog, or over-the-air broadcast-only, television;
3) Costs incurred by consumers will be disproportionately imposed on
those least able to afford them and steps must be taken to
mitigate these costs; and
4) A comprehensive and wide-reaching consumer education program must be
instituted well in advance of any determined date of the
transition to digital television.
CONSUMERS, PARTICULARLY OLDER AMERICANS, HAVE EXPERIENCED A GROWING
RELIANCE ON TELEVISION.
Since the first public demonstration of television in 1935,
consumers have had a growing reliance on television technology. Today,
television offers more than just entertainment; it is also a source of
information about what is happening in the community and around the
world. It provides consumers with life-saving weather forecasts,
information on government, politics, and community news, and brings
them closer to every corner of the world. For the mid-life and older
Americans AARP represents, television can be a primary connection to
the outside world. In fact, Americans aged 50 and above watch the
greatest average number of hours of television a day, almost 5.5 hours,
compared to all other age groups.1 Television gives those
spending more time confined to their homes companionship and comfort,
lessening a sense of isolation.
---------------------------------------------------------------------------
\1\ Nielsen Media Research, 2005.
---------------------------------------------------------------------------
WHILE DIGITAL TELEVISION OFFERS BENEFITS FOR CONSUMERS, THERE ARE ALSO
SIGNIFICANT COSTS TO CONSIDER IN THE TRANSITION FROM OVER-THE-AIR
BROADCAST-ONLY TELEVISION.
Digital television technology is the greatest transformation
television service has experienced since the advent of color television
50 years ago. It offers consumers better-quality transmission and a
wider range of programming options. Digital television delivers a
significantly sharper resolution than over-the-air broadcast-only
television, and a higher-quality sound. This is an exciting
technological development for television viewers.
Consumers anticipate the benefits this new technology will offer.
However, there are also significant costs associated with this
transition. The transition from over-the-air broadcast TV to digital TV
will place millions of consumers at risk of losing their television
service entirely and will require them to purchase additional equipment
in order to continue to enjoy a service they have been receiving for
free. For consumers with over-the-air broadcast-only television sets,
the move to digital television will be costly and inconvenient. Given
all that television now offers consumers, we are concerned that a
transition to digital television could disenfranchise some consumers,
particularly older Americans.
COSTS INCURRED WILL BE DISPROPORTIONATELY IMPOSED ON THOSE LEAST ABLE
TO AFFORD THEM.
A large number of consumers will have to incur some level of
expense to convert their television sets to receive digital
programming. According to a 2004 Congressional Research Service report,
while the number of consumers purchasing digital television sets is
increasing every year, only about 1% of households have purchased an
integrated DTV, which contains a built-in digital tuner. These TV sets
require no additional equipment, but are currently an expensive
purchase for most consumers, sold at prices ranging from about $1,000
to $10,000. Digital monitors, sold for a more reasonable range of $500
to $1,000, must be coupled with a set-top digital receiver or tuner in
order to receive digital broadcast signals. In 2004, these set-top
receivers cost in the range of $300 to $500.
At the point when the transition from over-the-air broadcast-only
to digital television is complete, millions of consumers will require
some sort of equipment purchase to continue to receive television
service. Those with digital monitors will need to purchase the set-top
digital receivers; cable customers on basic, non-digital, service
packages will need to purchase equipment to convert their analog
service to digital cable service; and finally, consumers with over-the-
air broadcast-only television service will need to purchase and install
a converter box. The cost of such a converter box is expected to be in
the range of $50 to $125, depending on the date of the transition and
the volume of boxes to be purchased. In addition to the costs of the
converter box, there could be additional costs for installation and for
purchase of special rooftop antennas. These costs do not account for
the time spent and inconvenience consumers will experience with the
purchase and installation of the required equipment.According to a 2004
survey,2 about 21 million consumers rely on over-the-air
broadcast-only television. These are the consumers who will be without
any television at the point of the transition unless steps are taken to
adapt their television sets. In recent testimony before this
Subcommittee, the GAO reported that of the 21 million over-the-air
broadcast-only households, 48 percent have incomes under $30,000.
According to the report, ``non-white and Hispanic households are more
likely to rely on over-the-air television than are white and non-
Hispanic households.'' Of the 21 million households, approximately 8.6
million include at least one person over the age of 50.3
Millions of these consumers are on fixed incomes and/or are in lower
income brackets.
---------------------------------------------------------------------------
\2\ Knowledge Networks/SRI, Home Technology Monitor Ownership
Survey, Spring 2004.
\3\ Nielsen Media Research TV Household Estimates, 2003-2004.
---------------------------------------------------------------------------
AARP's major concern is with the millions of consumers, many of
them older citizens, with over-the-air broadcast-only television sets.
As noted, a significant number of these individuals and households will
be hard put to afford costly conversion equipment. We urge Congress to
consider the health and welfare of these consumers and arrange an
assistance program that is directed toward those in greatest need.
A COMPREHENSIVE AND WIDE-REACHING CONSUMER EDUCATION PROGRAM MUST BE
INITIATED WELL IN ADVANCE OF ANY DETERMINED DATE FOR THE TRANSITION TO
DIGITAL TELEVISION.
An important first step to alleviate the negative impacts of this
transition is to educate the general public well in advance of the date
when the transition will be complete. When the transition occurs,
millions of TV sets will go dark. Can you imagine the confusion and
distress that will result if consumers are unaware that this will
happen? AARP recommends that a comprehensive plan to educate the
general public be implemented at least one year before the transition
occurs. We suggest several steps to educate the public:
First, public service announcements (PSA) for television and radio
should be developed, perhaps by the Federal Communications Commission
(FCC), to inform consumers that on the date determined, over-the-air
broadcast-only television sets will not work unless certain steps are
taken. The PSA would display a toll-free telephone number for consumers
to call and receive more detailed information on the equipment required
for their television sets. Consumers will need specific information on
how to purchase a set-top box, the installation process, and all costs
involved with these steps.
Second, a mail insert detailing the transition and providing the
necessary consumer information should be prepared and sent in a
government mailing received by the widest range of consumer
populations. Annual tax forms are an example of a vehicle that could
serve as the government mailing to include an enclosure with transition
information.
Third, the Federal Communications Commission should expand its
outreach plans for the digital television transition and prepare
consumer-friendly materials for the general public. The materials
should be distributed at libraries, community centers, and other public
places that currently distribute consumer information. This is an
opportunity for the FCC to be creative in crafting an effective
outreach plan.
Fourth, any commercial place of business selling television sets
should be required to inform consumers of the transition. If consumers
need to buy a new television during the time prior to the designated
transition date, they should know that purchasing an over-the-air
broadcast-only television set will require another expense to adapt to
digital television.
Finally, AARP commits to doing its part to educate our members
about the transition. AARP has several communications tools that can be
used to pass on critical information to our members. The bi-monthly
AARP magazine and monthly Bulletin, distributed to all members, are two
such communication tools we can utilize to inform consumers about the
transition and what they will need to do to continue to watch their
television service.
AARP will be pleased to work with Congress and the designated
federal agencies to help design the most effective plan to educate and
assist consumers with the digital television transition. Thank you for
this opportunity to present AARP's views on this important matter.
Mr. Shimkus. Thank you, ma'am.
The Chair would now like to recognize Mr. Manuel Mirabal,
Founder and Co-Chair of the Hispanic Technology and
Telecommunications Partnership. Mucho gusto, and you are
recognized for 5 minutes.
STATEMENT OF MANUEL MIRABAL
Mr. Mirabal. Gracias.
Good afternoon, Mr. Chairman and members of the
subcommittee. I greatly appreciate the opportunity to discuss
the digital television transition with you today.
HTTP's concerns regarding the impact of the digital
transition on Hispanic consumers are far-reaching. Hispanic
consumers use free, over-the-air television more exclusively
than other consumers. There is little doubt that the public
stands to benefit from the digital transition. High-definition
programming, additional programming streams, and more efficient
use of spectrum will all enhance television service. Both the
manner and impact of terminating analog programming are of
great concern.
I wish to focus, in particular, on the impact this will
have on Hispanic consumers and what Congress can do to ensure
that Hispanic Americans are included in and benefit from the
digital transition. This focus is warranted for several
reasons. Reliance on over-the-air analog reception is highest
among Hispanic viewers, one-thired of whom rely exclusively on
over-the-air reception for their television viewing, an
additional 7 percent of which are DBS households that rely on
over-the-air reception for all of their local programming. Thus
a total of 40 percent of Hispanic households nationwide rely
exclusively on over-the-air reception for their local news,
emergency information, and other programming. Digital
television technology has so far failed to make any inroads in
the Hispanic community, with industry data indicating that use
of DTV receivers in Hispanic households is the lowest among all
consumer groups.
Further, the Hispanic community is unique among consumer
groups, because the percentage of Hispanics relying exclusively
on over-the-air reception has actually increased significantly
over the last few years while it has decreased for other
segments of the population.
These three facts lead to one inescapable conclusion: any
DTV transition plan that does not specifically address needs of
the growing Hispanic population will disenfranchise the large
segment of the Latino community. The Hispanic community has
unique characteristics that will require special educational
efforts to ensure that they understand the steps they must take
to keep their sets working when analog TV ends.
Apart from potential language barriers, Hispanics are less
likely to obtain information about the digital transition
through the Internet. While the percentage of Internet use by
the total population is now 58.7 percent, for Hispanics it is
only 37.2 percent.
Many Hispanics are Spanish dominant or primarily Spanish
dominant. Hispanics have larger family households with several
generations living together. These result in larger numbers of
television sets per household, typically three sets being used
within the family.
Most importantly, television programming, and especially
Spanish-language programming, is not merely a source of
entertainment for America's Hispanic population. The Hispanic
community depends on over-the-air television service as a
critical source of news, public affairs, and uniquely local
information that is necessary to keep Spanish speakers in the
mainstream of American life. Recent immigrants, in particular,
need over-the-air television to provide them access, in
Spanish, to the news in their local communities and keep them
informed of what is going on in order to better fully integrate
them into the American society. Local over-the-air broadcast
stations featuring: Univision, Telemundo, TeleFutura, TV
Azteca, and other Spanish-language programming provide this
vital information to the Latino community.
Because the Hispanic community relies so heavily on over-
the-air television, it will face a disproportionate impact when
analog service ends. Moreover, for the most vulnerable segment
of this population paying hundreds and even thousands of
dollars for new equipment or services will prevent a real
financial hardship that they simply can not afford.
Solutions that do not take these factors into account will
fail to address the needs of the Hispanic community. For
example, I have seen proposals for a phased approach to the DTV
transition whereby some analog stations are shut down each year
until there are none left. However, the phased transition
proposals would first shutdown those very same analog stations
that are assigned to serve Spanish language and other minority-
oriented communities. Such an approach would effectively
abandon Hispanic viewers and is completely unacceptable.
To ensure that consumers are well informed of the DTV
transition and understand fully the steps that they must take
to continue to use their analog sets, several things must be
done. The public must receive effective notification in English
and Spanish that analog broadcasting will be terminating.
Information about the timing of the DTV transition and the
planned obsolescence of analog television sets must be provided
to the Hispanic community in Spanish via many types of media,
including Spanish-language television, radio stations, local
newspapers, equipment labeling, and documentation.
Second, we must make digital-to-analog converters readily
available to the public. Providing digital converters at no
cost to over-the-air viewers is an unavoidable price of the
digital transition.
Third, before it establishes a hard date for the return of
analog spectrum, Congress must give Hispanic consumers, and all
consumers that receive over-the-air TV, adequate time to learn
about the transition so that they can make informed decisions
when, and if, they are buying new televisions and also to
prepare for the end of the analog TV. Cutting consumers' analog
televisions without ensuring that they possess a digital
alternative will disenfranchise millions of consumers, harm the
economy, and short circuit the digital transition.
It is, therefore, critical that Congress allocate the funds
necessary to make the digital converters available and invest
in the infrastructure necessary to broadly publicize and
distribute them. To succeed, the government's efforts must
reach Hispanic households, must be culturally sensitive, and
must include a substantial Spanish-language public education
component.
If Congress wants the digital TV transition to succeed, it
must design a program that will, and I am borrowing a
statement, truly leave no TV behind.
Thank you for inviting me to testify. We look forward to
working with you to ensure that the Telecommunications and the
Internet Subcommittee can make this TV transition a successful
one.
Gracias.
[The prepared statement of Manuel Mirabal follows:]
Prepared Statement of Manuel Mirabal, on Behalf of the Hispanic
Technology and Telecommunications Partnership (HTTP)
Good afternoon, Mr. Chairman and members of the Committee. I am
Manuel Mirabal, Founder and Co-Chair of the Hispanic Technology and
Telecommunications Partnership (HTTP). HTTP is the largest coalition of
national and regional Hispanic organizations and represents the
interests of 44 million Americans of Hispanic descent on technology and
telecommunications issues. HTTP members are nonprofit organizations
dedicated to promoting the social, political, and economic advancement
of Hispanic Americans by facilitating access to health care, quality
education, economic resources, and technology tools and resources.
Since 1993, I also have served as President of the National Puerto
Rican Coalition, the largest national organization representing the
social and economic interests of eight million Puerto Rican U.S.
citizens. As President of NPRC, I served for five years as National
Chairman of the National Hispanic Leadership Agenda (NHLA). NHLA is a
coalition of 42 National Hispanic organizations and civic leaders that
addresses national public policy issues affecting the Hispanic
community. NHLA issues a national policy agenda on social and economic
issues affecting all Latinos and a Congressional Scorecard tracking
votes on legislation that affects Hispanic Americans. I am also an
appointed member of the Nielsen Independent Task Force on Television
Measurement. The task force was established to study and make
recommendations about the methodology used to measure minority
television viewership.
Thank you for inviting me to participate in this important
discussion of the digital television transition. I welcome the
opportunity to share with the Committee HTTP's concerns regarding the
impact of the digital transition on Hispanic consumers, in particular,
and to offer our thoughts on how best to inform Hispanic consumers of
the timing and effects of the transition and the steps that must be
taken to ensure their continued access to free, over-the-air television
service after the transition.
As you contemplate this daunting task, I urge you to consider that
the success of the digital transition will ultimately be measured by
its impact on over 70 million American citizens who rely on over-the-
air broadcast television and the more than 40 million Americans who
rely exclusively on over-the-air broadcast television for news,
information, and entertainment. This hearing is an important step in
identifying and beginning to address that impact, and I commend the
Committee for its efforts here today.
The members of HTTP recognize that the public stands to benefit
from the digital transition in numerous ways: high definition
programming; additional new programming streams; and more efficient use
of spectrum will all enhance consumer welfare. The potential to offer
multiple streams of programming over a single television channel--
including a high definition service--is particularly exciting, because
this capability increases the opportunities for more Spanish-language
programming on free, over-the-air television. There is, however, one
fundamental prerequisite to realizing these benefits: viewers must be
capable of receiving DTV signals. At the present time, a large
percentage of the population, and virtually one hundred percent of
over-the-air viewers, are unable to view DTV signals. Although the FCC
has mandated that television set manufacturers include built-in digital
receivers on a phased-in basis--a mandate that will not be fully
implemented until July 2007--most experts agree that the vast majority
of Americans will receive digital programming by subscribing to pay
television services offered by multichannel video programming
distributors (MVPDs), such as cable or direct broadcast satellite
services. This means that consumers who cannot afford to buy expensive
new television sets or subscribe to pay television service are at risk
of losing access to television entirely. While it will be unfortunate
if these viewers are deprived of the many benefits of the digital
transition, it will be tragic if the principal impact of the digital
transition upon their lives is rendering their analog televisions
obsolete, thereby severing their television lifeline to news and
emergency information.
While both the manner and the effect on consumers of terminating
analog broadcasting are of great concern, I wish to focus in particular
on the impact of this dramatic change on Hispanic households in the
U.S. This focus on the Hispanic segment of the population is warranted
for three reasons. First, as the FCC and the GAO recently acknowledged,
reliance on over-the-air analog reception is highest among Hispanic
viewers, one-third of whom continue to rely exclusively on over-the-air
reception for all of their television viewing. An additional 7% of
Hispanic households are DBS households that rely on over-the-air
reception for all of their local programming. Thus, a total of 40% of
Hispanic households nationwide rely exclusively on over-the-air
reception for their local news, emergency information, and other local
programming. Second, digital television technology has so far failed to
make inroads into the Hispanic community, with Nielsen data indicating
that use of DTV receivers in Hispanic households is the lowest among
all consumer groups. Third, the Hispanic community is unique among
consumer groups because the percentage of Hispanics relying exclusively
on over-the-air reception has actually increased significantly over the
past few years, while that percentage has been decreasing for other
segments of the population.
These three facts lead to one inescapable conclusion--any DTV
transition plan that does not specifically address the needs of the
growing Hispanic population risks the disenfranchisement of a large
segment of that population.
The Hispanic community is now the largest ethnic minority in the
Unites States. The full inclusion of Latinos must be assured if we are
to succeed in integrating new technologies into our society. To
accomplish this in moving toward a fully digital television system, we
must recognize that the Hispanic community has unique characteristics
that will require special educational efforts to ensure that they
understand the steps they must take to have continuous access to
television service.
Although the Internet can be a very useful source of information,
the Internet alone is not adequate for the purpose of informing
America's Hispanic viewers of the key elements of the digital
transition. Apart from potential language barriers, statistics show
that Hispanics are less likely to obtain information about the digital
transition through the Internet. The Department of Commerce's most
recent report on Internet use by Hispanics indicates that the digital
divide has grown to 21.5%. While the percentage of Internet use by the
total population is 58.7%, for Hispanics it is only 37.2%.
Many Hispanics are Spanish dominant or primarily Spanish dominant.
Therefore, information about the digital transition must be provided to
them in Spanish via many types of media, including Spanish language
television and radio stations, local newspapers and equipment labeling
and documentation. Language usage also affects the ability of Spanish-
dominant Latinos to interact with government agencies, which are often
less likely to have Spanish-speaking staff. Therefore, before it
establishes a hard date for the cessation of analog broadcasting and
the return of analog spectrum, Congress should require that information
be made available--in Spanish and through the use of multiple media--to
educate Hispanic consumers about the timing of the transition and the
planned obsolescence of analog TV sets.
The obsolescence of analog TV sets also will have a particular
impact on Latino Americans. Hispanics have larger family households,
with several generations living together. This results in a larger
number of televisions sets being used within the household, including,
typically, a set in the family room, one for the children, and often a
set that is reserved for the use of the grandparents. Therefore, any
program to address the digital transition must anticipate that a large
segment of the Hispanic community will require a solution that provides
assistance for up to three TV sets in each household.
Television programming--and especially Spanish-language
programming--is not merely a source of entertainment for America's
Hispanic population. The Hispanic community depends on over-the-air
television service as a critical source of news, public affairs and
other uniquely local information that is necessary to keep Spanish-
speakers in the mainstream of American life. Recent immigrants in
particular need over-the-air television to provide them access, in
Spanish, to the news in their local communities and help them become
fully integrated into American society. Local broadcast stations
featuring Univision, Telemundo, TeleFutura, Azteca and other Spanish-
language programming available over-the-air provide to their audiences
Spanish-language news, information, and other programming on current
events that affect their daily lives and keep them connected to their
communities and the world.
Because the Hispanic community relies so heavily on over-the-air
television, it will face a disproportionate impact when analog service
ends. Most Hispanic Americans, particularly those who are native
Spanish speakers, are not aware of the digital transition and thus are
not prepared for its impact. They do not realize that on a certain
date, their televisions will become inoperable unless they purchase
expensive digital converter equipment or even more expensive digital
television sets. Based on where the transition stands now, we should
not be considering a near-term cut-off date that would disenfranchise
millions of Hispanic consumers without addressing the issues we have
identified here today. Moreover, for a segment of this population--the
most vulnerable segment--paying hundreds or even thousands of dollars
for new equipment or services will present a real financial hardship
that they simply will not be able to shoulder. These viewers--just like
those who can afford to buy new equipment--should be allowed to retain
full access to free, local television programming during and after the
digital transition.
Solutions that do not take these factors into account will fail to
address the needs of the Hispanic community. For example, I have seen
proposals for a ``phased'' approach to the DTV transition whereby some
analog stations are shut down each year until there are none left.
However, the ``phased'' transition proposals I have seen so far would
first shut down those analog stations assigned to channels above
channel 51. Unfortunately, that is precisely where Spanish-language and
other minority-oriented stations are currently concentrated. Rather
than moving Hispanic viewers to DTV sooner, such an approach would
effectively abandon them altogether. This result is completely
unacceptable for America's largest minority population.
To ensure that Hispanic consumers are included in and benefit from
the digital transition, some obvious steps need to be taken. First,
given that 23.6 million analog television sets were sold last year,
nearly fifty times the number of digital tuners sold in that same time
period, the public must receive effective notification that analog
broadcasting will be terminated. At a minimum, this will require
labeling analog television sets in both English and Spanish with a
warning that analog broadcasting will be terminated on a date certain
and that the set will then be incapable of over-the-air reception
without additional equipment.
Our government must also become much more effective than it has
been so far in communicating this critical fact to consumers--in
English and in Spanish--because even if no new analog sets are sold
from this day forward, there are already hundreds of millions of analog
sets in American homes that will need to be replaced or connected to a
converter box to function. Studies have indicated that few consumers
are even aware of the planned shut-down of analog television, much less
know what steps they need to take to ensure continued access to their
local news and entertainment programming. I note that a key component
of the rapid DTV conversion in Berlin involved the government sending a
letter to every household informing consumers of what is involved in
the transition to DTV, and providing information on what steps had to
be taken by consumers to ensure continued access to television
programming.
Beyond making consumers aware that they are about to find
themselves on the wrong side of the digital divide, we also need to do
all we can to bridge that divide. Right now, the most effective tool
for accomplishing that is to make digital to analog converters readily
available to the public. If Congress wants the DTV transition to
succeed, it must adequately invest in a program that truly will ``Leave
No TV Behind,'' or face a long and painful series of costly, piecemeal
efforts and improvised solutions aimed at resolving the issues
afterward.
Providing digital converters at no cost to those needing them--
principally over-the-air viewers--is the unavoidable price of admission
to an all-digital broadcast system. Congress must also acknowledge that
needy Americans cannot afford to buy expensive converters or digital
equipment merely to avoid losing the free television service they
already enjoy.
The solution, we believe, lies in providing a subsidy for the
necessary equipment for those households that cannot afford to
subscribe to an MVPD. The subsidy must be sufficient to pay for
conversion equipment that will permit the viewer to gain full access to
local television programming available in the digital format, including
the higher quality video and audio outputs offered by digital
broadcasts and future multiple programming streams.
Cutting consumers' analog television lifeline without ensuring that
they possess a digital lifeboat would be a very short-term, and very
harmful, solution. It is therefore critical that Congress allocate the
funds necessary to make these converters available and invest in the
infrastructure necessary to broadly publicize and distribute them.
Ample supplies of converters will not help if consumers are unaware
that they are entitled to a converter or don't know how to obtain one.
To succeed, these efforts must reach Hispanic households, must be
culturally sensitive, and must include a substantial Spanish-language
public education component.
While we all look forward to the benefits that digital television
will bring to all Americans, the DTV transition must be managed in a
way that does not disenfranchise millions of Hispanic Americans. Only
then will Americans of Hispanic descent, who depend on free, over-the-
air television, be fully included in the digital transition.
Thank you for inviting me to testify before you today. I know that
the members of HTTP stand ready to work with the Subcommittee on
Telecommunications and the Internet to ensure that Hispanic consumers
are informed of the DTV transition and understand fully the steps they
must take to continue to use their television sets after analog
broadcasting ends.
Mr. Upton. Thanks--gracias.
I want to thank my colleague, Mr. Shimkus, for starting
this hearing close to on time. I was under the mistaken
impression that it was going to be in another room, and I was
waiting for that hearing room to clear out.
I would also note, however, that we have, I believe, four
or five votes on the House floor. The second bells have rung,
so we are going to take a brief adjournment and we will come
back as soon as the last vote is over. My guess is it will not
be before 2:15. So we will start with Mr. Arland at that point,
and we will stand adjourned until then.
[Brief recess.]
Mr. Upton. Okay. All right. So we had so many votes, and we
are now back, and we will resume with Mr. Arland. Welcome back
to the subcommittee. It is good to see you. I am anxious to
hear you. My staff has told me a little bit about the
description of the TVs, so I am anxious to get the full
details. Thank you, and welcome.
STATEMENT OF DAVID H. ARLAND
Mr. Arland. Very good. Thank you, Chairman Upton and
members of the subcommittee for the opportunity to provide
Thomson's and TTE Corporation's perspectives on how to complete
a consumer-friendly transition to digital television.
My name is Dave Arland. I am Vice President of
Communications and Government Affairs for Thomson, and I am
also here today to represent TTE Corporation, which is the
world's largest television manufacturer.
This committee continues to play a pivotal role of the
transition, and the marketplace response, I think, has been
impressive. Since I last testified before this subcommittee in
2001, almost exactly 4 years ago, the number of DTV products
sold in the U.S. has grown 16-fold. Digital television prices
have fallen steadily, and the supply of HDTV programming has
grown and continues to grow rapidly, so much so that my own
mother says she can't watch analog TV anymore. It hurts her
eyes.
As the digital television transition moves to completion,
consumers, manufacturers, and retailers need, more than ever,
the certainty of firm deadlines to ensure that their
investments in digital products will generate the benefits long
promised by the advocates of digital broadcasting.
As this committee clearly understands, however, the biggest
challenge before all of us is how to ensure that American
consumers, particularly those who rely exclusively on over-the-
air signals, and also cable subscribers are sufficiently
prepared for the day when their analog television morphs into
digital.
Thomson believes that our collective ability to meet this
challenge depends on several important factors.
First, of course, DTV must be affordable for all consumers.
This year, we at RCA will introduce a new line of standard
definition digital televisions that, for the first time, will
offer consumers digital TV essentially at analog prices. Our
new SDTV lineup, a prototype of which is on the right side of
the display on the other side of the room, will include digital
reception but carry a suggested retail price starting from
under $300 for a 27-inch TV and under $400 for a 32-inch
standard definition digital TV, or SDTV, and you can see the
logo right above the screen.
While these sets are not designed to display HDTV in its
full widescreen glory, they do offer DVD picture quality and
are ideal for another key benefit of this transition: receiving
multiple additional channels of standard definition digital
programming transmitted by a local broadcaster.
In addition, looking ahead to those millions of consumers
who will need to purchase a digital-to-analog set-top box, I
have with me at the witness table this afternoon a prototype of
the RCA low-cost set-top converter box, which, pending the
establishment of a firm deadline for the broadcasters' return
of their analog spectrum, will be available later this year at
a suggested retail price under $125. That is half the cost of
similar converters now available at retail.
My second point is that all stakeholders must take
responsibility for promoting digital television and educating
consumers and retailers about the transition. The consumer
electronics industry is keenly aware of the need to educate all
Americans about the DTV transition and has been doing so for
several years. For example, the Consumer Electronics
Association has launched Antennaweb.org, which is a
complimentary website, operated for the last 4 years by CEA. It
allows consumers to go in, easily enter their zip code, and get
suggestions about what type of antenna would work best. I
should mention that antenna sales have never been stronger. Not
since the 1950's have we sold more than 3.9 million antennae,
which is what we sold last year, at prices ranging from $4 to
$80. There is a rabbit ear antenna that is on this
demonstration here powering both the analog and digital feeds.
It sells for $14.95.
We also did, as an association, the DTV tip sheet.
Mr. Upton. Excuse me just 1 second. I just know that the
ACC tournament is on. I wonder if they could switch from
cartoons to----
Mr. Arland. Well, I could do that.
Mr. Upton. The Big 10 is playing as well. ESPN. All right.
Right. I am trying to help out my friend from Maryland who----
Mr. Wynn. They lost already.
Mr. Upton. Did they lose? See, I didn't know that, because
I have been waiting for the score to appear. Okay.
Mr. Arland. So my answer on that is I could show you the
analog signal, but unfortunately, UPN locally is sending out
signals so weak I can't pick them up in this room,
unfortunately. I would love to be able to switch on the
tournament, however.
We have also worked together with the Consumer Electronics
Retailers Coalition on a DTV tip sheet, which Leonard is going
to say more about. It is a great piece also worked up with the
FCC designed to educate retailers. It is a handy guide to all
of the terms of the transition. And I think consumers would
also find that useful. And our association has produced the
HDTV guide, which this year has 55 manufacturers offering more
than 500 different DTV products, and it has grown from a
publication that was just about three pages several years ago.
Of course, manufacturers can't do this alone. Consumers
need to learn about television on television. And I think more
help needs to be given from broadcasters and from cable.
Finally, as consumers go digital, they will expect that
digital is better than analog. Well, what does that mean? It
means in some cases delivering high-definition movies, sporting
events, and prime-time programming. It also means multiple new
digital standard definition channels of local community-
oriented programming, such as news, weather, sports, and non-
English programs. It also means meeting consumers' expectations
that they will be able to access and interact with digital
television just as easily and conveniently as they interact
today with analog TV, and that includes preserving the ability
to receive cable programming without the need for a set-top box
and preserving established home recording capabilities.
In conclusion, from our perspective, the most important
thing this committee can do is enact legislation establishing a
hard deadline. Set the analog spectrum return date. That is
what this transition really needs.
I am, of course, prepared to respond to questions from
members.
[The prepared statement of David H. Arland follows:]
Prepared Statement of David H. Arland, Vice President, Communications
and Government Affairs, Thomson, Inc.
Thank you, Chairman Upton, Ranking Member Markey and Members of the
Subcommittee for the opportunity to provide Thomson's and TTE
Corporation's perspectives on how to complete a consumer friendly
transition to digital television. My name is Dave Arland, and I am Vice
President for Communications and Government Affairs for Thomson's
Connectivity Business Unit.
Thomson is an international company that provides technology,
systems and services to help its media & entertainment clients--content
creators, content distributors and users of its technology--to realize
their business goals and optimize their performance in a rapidly
changing technology environment. Our goal is to become the preferred
partner to the media and entertainment industries through our
Technicolor, Grass Valley, RCA, and THOMSON brands.
I'm also here today to represent TTE Corporation, a joint venture
established last summer between China's largest television
manufacturer, TCL, and Thomson, one of Europe's largest companies
serving the media and entertainment industries. TTE is a leading global
television enterprise, specializing in research and development,
manufacturing, and sales of TV products. TTE offers a complete range of
television products--from budget to premium, from basic features to
high-end innovation. RCA-brand televisions come from TTE Corporation.
This Committee--and particularly this Subcommittee--has played an
instrumental role in moving forward the DTV transition. Indeed, we
believe that this intervention--including the establishment of hard
deadlines where needed--has provided stakeholders with the requisite
certainty to make critical business decisions. Thanks in significant
measure to the Committee's relentless prodding and the clear signals it
has sent to the Commission, today we have: Digital Cable-Ready HDTV
Sets that pull the plug on consumers' dependence on a set-top box; a
phased-in tuner-decoder mandate to ramp up DTV penetration as well as
affordability; secure digital interfaces and the Broadcast Flag, so
consumers can enjoy, and record for their personal use, ever-greater
amounts of high-quality digital programming while protecting such
digital content from indiscriminate redistribution over the Internet.
The marketplace has responded impressively to this Committee's
approach of targeted intervention, both formal and informal. Just look
at the progress that's been made in the past four years. When last I
testified before this Subcommittee, which was almost four years ago to
the day:
In 2001, fewer than a million DTV sets and displays had been sold
in the U.S. Today, that number exceeds 16 million. Another 13 million
units of integrated DTV products are expected to be sold this year
alone.
Four years ago, the average retail price for an HDTV Monitor
(without a tuner-decoder) was in the range of $2,200. Today, that price
has dropped by a third to around $1,400.
The price drop is far more dramatic for integrated HDTV receivers.
For example, our first HDTV Set was a 61-inch model that carried an
$8,000 price tag. Today, a similar 61-inch model can be found for under
$3,000--an incredible 62 percent price reduction since the DTV
transition began.
In 2001, the most affordable digital-to-analog converter box
available (in fact, the first such converter box available)--the
venerable RCA DTC100, offered by Thomson--was a then-remarkably-low
$549. I am pleased to announce this morning to this Subcommittee that
later this year, pending the establishment of a firm deadline by which
broadcasters must return their analog spectrum, Thomson will again lead
the way in converter box affordability by introducing an RCA set-top
converter box specifically designed to help consumers preserve the
usefulness of their existing analog equipment. This small set-top
receiver connects easily to an antenna and an analog TV and will carry
a retail price of less than $125--about half the current selling price
for digital-to-analog converters. Even greater strides in affordability
can be made if our customers, the nation's retailers, stock up in
greater numbers, and, of course, as economies of scale are realized
from increased sales. We need a firm analog spectrum return deadline to
build a market for this type of affordable converter, since few
consumers actually believe that a firm deadline will be established.
HDTV programming also has grown by leaps and bounds. Back in 2001,
consumers purchasing an HDTV receiver or monitor could choose from only
about three hours a day of HDTV programming from the major broadcast
networks and, if they subscribed to cable or satellite, 5 or so pay
networks that offered some HDTV programming. Today, the top broadcast
networks combined offer 90 to 100 hours of HDTV programming each week,
and that doesn't even include sports programming. In addition,
approximately 26--cable and satellite networks offer hundreds of hours
of HDTV programming weekly.
Since 2001, the number of DTV broadcast stations on-the-air has
grown from about 190 stations, mainly in the top 30 markets,
collectively only covering 67 percent of all TV households, to nearly
1,400 stations in all 210 markets, covering over 99--percent of TV
households, according to NAB's latest figures. Still, and quite
troublingly, more than 200 stations have yet to get their digital
signal on the air, and as many as half of the DTV stations that are on-
the-air still may not be operating at sufficient power to provide a DTV
signal to everyone in their coverage areas. At the very least, digital
TV signals ought to cover the same service area as do analog
broadcasts. Consumers expect that, and so should you.
Despite the significant advances that have been made, the DTV
transition remains a work in progress, with important challenges still
ahead. As this Committee clearly understands, however, the biggest
challenge before all of us is how to ensure that American consumers--
particularly those who rely exclusively on over-the-air signals but
also cable subscribers--are sufficiently prepared for the day when
their analog TV signals morph to digital.
Thomson believes that our collective ability to meet this challenge
depends on several important factors. First, DTV must be affordable for
all consumers. Second, consumers must have the information they need to
make informed DTV purchasing decisions. And third, DTV must offer
consumers some tangible, added value in exchange for their forced
departure from analog television.
DTV MUST BE AFFORDABLE FOR THE AVERAGE CONSUMER
There is perhaps no surer way to ``soften the DTV landing'' for
consumers, not to mention increase sales and maximize penetration, than
to offer a choice of DTV products that are truly affordable to the
average consumer. Making DTV as affordable as possible, as quickly as
possible, has been a mantra for RCA from Day One of the transition, as
well as for the members of this Subcommittee.
To achieve affordability, first it's important to recognize that
approximately one-half of all analog television sets sold every year in
the U.S. are tabletop TVs with screen-sizes 20-inches or smaller,
typically carrying a retail price of well under $200. These are just
basic TVs, many of which are the second or third sets in a household
that you find in the kitchen or bedroom. But these are consistently the
industry's best-selling televisions because they are both small and
affordable. And, as the Committee knows, 100% of TV sets 13-inch or
larger will be subject to the tuner-decoder mandate by the middle of
2007.
Consistent with its history of introducing some of the industry's
most affordable integrated DTV products, RCA once again is leading the
way by introducing this year a line of standard definition DTVs that
for the first time will offer consumers digital television at
essentially ``analog'' prices.
Developed in the global laboratories of TTE Corporation, this new
SDTV lineup still has suggested retail prices starting from under $300.
Consumers will be able to replace their old analog TV with a digital
TV--specifically, a new product the industry calls SDTV, for standard-
definition digital television. These sets, which range in standard
aspect ratio screen sizes from 27-inch to 32-inch, include a built-in
DTV reception capability, receive all 18 ATSC DTV formats, and display
broadcast DTV at DVD quality. While these sets are not designed to
display HDTV in its full widescreen resolution, they are ideal for
another key benefit: receiving multiple additional streams of standard-
definition programming when transmitted by a local broadcaster.
Looking ahead to the millions of consumers who will need a Digital-
to-Analog set-top box to receive digital signals and view them on their
current analog set, the new RCA low-cost set-top converter I have with
me today will be available this fall at a suggested retail price of
under $125. Like RCA's SDTVs, this small converter will receive all 18
ATSC DTV formats and will enhance consumer's television experience by
not only improving the analog TV's picture quality, but by receiving
and displaying all multicast signals that broadcasters choose to
transmit.
Of course, these low-cost products represent just one segment of
the more than 30 new models of DTV products that TTE has slated for
introduction this year, including integrated tuner-decoder rear-
projection Digital Light Processing (DLP TM) HDTV Sets, rear
projection CRT (Cathode Ray Tube) HDTV Sets, and LCD and Direct View
HDTV Sets. In short, whatever the need and budget of the American
consumer, TTE is committed to offering a good looking and affordable
RCA solution. In the 1920's, during radio's heyday, RCA advertised that
it had a ``Radiola for Every Purse''--something for everyone. The same
can be said today.
BROAD-BASED CONSUMER EDUCATION IS A RESPONSIBILITY OF ALL DTV
STAKEHOLDERS
The consumer electronics industry is keenly aware of the need to
educate all American consumers about the DTV transition. We simply can
shoot no lower than that goal, given that all American households
ultimately will have to make a DTV purchase in order to continue to
receive broadcast television. As I will describe, the consumer
electronics industry is deeply committed and fully engaged in that
education effort--not only for consumers, but also for retailers, from
whom consumers receive most of their product information. We cannot do
it alone, however, especially within an accelerated time frame, when
Congress enforces a ``hard deadline.'' Other DTV stakeholders--
including broadcasters, cable and satellite operators--need to increase
dramatically their outreach to consumers to ensure that no U.S.
household is unprepared when the end of the transition finally arrives.
For instance, broadcasters--who have the ability to reach every TV
household quickly and repeatedly--should use that ability, through
Public Service Announcements and through their regular program
advertising, to better communicate with consumers about HDTV
programming and the DTV transition generally. Broadcasters have asked
for this transition to help them to compete head-to-head with other
digital programming services; it's time for them to get serious about
promoting this transition and ensuring that consumers know as much as
possible about it.
The Consumer Electronics Industry Is Educating Consumers and Retailers
About The Benefits of DTV
The consumer electronics industry is engaged in a broad-based
campaign to educate the public about the benefits of DTV and the wide-
range of equipment choices now available to them. We also constantly
engage in a number of programs, both individually as manufacturers and
comprehensively as an industry, to educate retailers as a means of
reaching consumers.
1. Educating Consumers To Make Informed Choices
The industry's trade association, the Consumer Electronics
Association (``CEA''), last year worked with the FCC and others to
provide content for the Commission's new website, DTV.GOV (http://
www.dtv.gov). This website provides FCC-approved answers to the
questions most frequently asked by consumers; a glossary explaining new
DTV terminology; and a shoppers' guide explaining what every shopper
should know about DTV. This website also links to TV listings where
consumers can enter their zip codes to access current local DTV and
HDTV programs.
If they do not already use an antenna for over-the-air analog
television reception--which in most cases will be perfectly suitable
for receiving digital signals, consumers can get help selecting an
antenna at ANTENNAWEB.ORG (http://www.antennaweb.org), a complementary
website operated for the last four years by CEA which uses zip codes to
provide location-specific advice. Regrettably, broadcasters, despite
their oft-repeated concerns about the need for over-the-air antennas,
declined CEA's offer to join them in launching this extremely useful
consumer website. It is worth emphasizing that existing antennas do not
need to be changed with the conversion to digital. If an antenna worked
for both VHF and UHF analog reception at one's home, it will continue
to work just fine for digital reception, so long as the broadcast
station is operating its digital signal with full facilities equivalent
to those for its analog signal. For those who do wish to purchase an
antenna, there is an abundance to choose from at all price points. In
fact, with sales of nearly 4 million last year, Thomson is one of the
leading manufacturers and marketers of over-the-air antennas. We offer
more than 46 different models under the RCA and Jensen brand names,
ranging in price from $4 to $80.
To accelerate the digital transition, a number of publications have
been designed and are distributed with the goal of educating consumers.
Working with the Consumer Electronics Retailers Coalition (CERC) and
the FCC, CEA designed, printed, and has made available both to
retailers and industry groups, in paper form and on the CERC, FCC, and
its own DTV.COM websites, a ``tip sheet'' that on one page clearly
explains the DTV transition and basic DTV terms and
technology.1 Working with Comcast, CEA also released an
educational DVD and booklet titled, A Consumer's Guide to the Wonderful
World of HDTV. In conjunction with Dealerscope, a NAPCO publication,
CEA produced an ``eGear Buyer's Guide,'' as well as an ``eGear Seller's
Guide'' related to DTV. CEA also recently teamed up with STARZ! to
produce the educational brochure, The 3 Simple Steps to HDTV.
---------------------------------------------------------------------------
\1\ A copy of the ``tip sheet'' is appended to this testimony.
---------------------------------------------------------------------------
In addition, on behalf of the consumer electronics industry, CEA
publishes the HDTV Guide. This 60-page guide, which is published three
times per year, gives news of the latest DTV product developments and
provides a comprehensive list of DTV products available in the U.S. CEA
also ran a multi-page advertisement in TV Guide explaining the DTV
transition targeted to over-the-air viewers; continues to run HDTV
Update meetings in major markets to help accelerate the DTV transition
at the local level; continues to sponsor the Academy of Digital
Television Pioneers Awards program (http://www.ce.org/dtvacademy);
continues to run its highly successful CEA Media Tour Program
specifically targeted to inform consumers and the media about the DTV
transition and to promote the sale of DTV products.
All of this, of course, is in addition to the hundreds of articles
and news broadcasts that quote manufacturers who are offering a
cornucopia of new DTV technologies.
Additionally, many players in the consumer electronics industry are
promoting the DTV transition through their sponsorship of special high-
definition broadcasts of popular sporting events. Sports fans have seen
RCA sponsor the Super Bowl, the NCAA Final Four, and the U.S. Open
Tennis Tournament in high-definition television, and we're just one
brand among many that have helped to push the transition along.
2. Retailer Training: We Must ``Educate The Educator''
It's also critically important to recognize that, when it really
comes down to it, the front lines of DTV education resides in the
retail stores. Many, if not most, consumers rely largely on retail
sales staff to help make their DTV choices and to answer the many
questions consumers typically have, such as the difference between a
standard definition display and a high definition display, or the
difference between an HDTV with an integrated tuner and an HDTV
Monitor. The sales person who has that ``deer-in-the-headlights'' look
when a consumer asks a question about DTV is pretty much guaranteed to
chill that consumer's confidence in making any DTV decision. Even
worse, purchases based on inaccurate or incomplete information from a
retail sales staff risks an even greater consumer backlash,
particularly when higher-end products are involved. In other words, we
must educate the educator.
In addition to retail training efforts being undertaken industry-
wide by CEA (including through its operation of the website,
``CEKNOWHOW.ORG'' (http://www.ceknowhow.org), which encourages retail
salespersons to obtain in-depth training about digital TV terms,
products, and capabilities), Thomson and TTE are deeply involved in
helping retail staff obtain the specialized, ongoing DTV training they
need to ensure our customers can make informed DTV decisions.
In fact, we initiated an HDTV sales staff training program as early
as 1998, when our integrated HDTV Sets were first introduced to the
market. In the seven-year span since then, we have:
Delivered over 15,000 HDTV training meetings;
Trained over 125,000 retail sales associates;
Conducted over 200,000 consumer demonstrations of HDTV at retail
outlets nationwide; and
Invested several million dollars in HDTV training materials, travel
and personnel;
Delivered more than 15,000 on-line HDTV training modules and tests
via RCAsupport.com, and paid out $750,000 in retail incentives
for HDTV training on the Web; and
Pioneered consumer and retailer education into non-traditional HDTV
distribution channels such as home shopping networks and rental
outlets.
In fact, our support of HDTV training has reached virtually every
shape and size of retailer and distribution channel, utilizing
virtually every conceivable type of media, from DVD, to print, to
satellite broadcast, to the Internet. Notably for this Committee, we
have led the way in HDTV training on integrated HDTV technology,
reflecting our long-standing commitment to its integrated HDTV product
line. In short, we have been as supportive of HDTV training as any
consumer electronics manufacturer, and more so than most. Here's just
one example of how this training pays off for retailers: we sold more
than 5,000 RCA HDTV products in one day to armchair shoppers on a home
shopping channel last year. Consumers are very interested in digital
television, because it delivered better picture and sound than analog.
The benefits, quite literally, are clear when consumers actually see
HDTV--and consumers must see a benefit to this transition.
CONSUMERS MUST SEE SOME ADDED VALUE IN EXCHANGE FOR THEIR FORCED
TRANSITION TO DIGITAL
Finally, since consumers ultimately are being forced to make some
sort of DTV purchase to receive broadcast television when it migrates
to a digital platform, that purchase must, in exchange, offer some
added value, regardless of whether they invest in a high-end HDTV, an
SDTV or simply get a converter box for their existing analog equipment.
Indeed, the Freudian concept that ``pleasure is merely the absence of
pain,'' has no application here. Consumers have been told to expect
great new things from DTV. They must get great new things from DTV or
they will toss great big things at all of us.
What does ``added value'' really mean? For one, it means digital
programming--lots and lots of digital programming. High definition
movies and sporting events as well as prime time programming. Multiple
new standard-definition channels of local, community-oriented
programming, such as news, weather, sports, ethnic, and non-English
programming. We must ensure that nothing stands in the way of filling-
up this huge digital pipeline to the home with as much high quality and
diverse programming as content owners can produce. We owe it to
consumers to enable them to receive all of that programming in the same
quality and resolution that it left the broadcast tower.
It also means meeting consumers' expectations that they will be
able to access and interact with digital television just as easily and
conveniently as they interact today with analog TV. This includes
preserving their ability to receive cable-delivered programming without
the need for a set-top box, and preserving their established home
recording capabilities.
CONCLUSION
We as a nation have made great strides toward the digital
television conversion. In some ways, however, the most challenging part
lies ahead: ensuring that our customers--your constituents--are
comfortable with and hopefully enthusiastic about converting to
digital. First, consumers cannot be harmed. That is a necessary but not
sufficient condition for a successful transition. Beyond that,
consumers must receive real added value from the conversion. They must
have the opportunity to enjoy the full benefits of digital television
technology and the accurate information to decide how they will receive
it.
Both Thomson and TTE are proud of the leading role we continue to
play in promoting digital television by offering consumers a choice of
products, including the introduction of our new SDTV receivers offering
digital TV at analog prices and this fall's introduction of low-cost
RCA Digital-to-Analog converter boxes. Indeed, whether it's a movie or
sports buff who wants the latest high-definition, ultra-thin DLP
television, a budget-conscious consumer looking for the best value in
HDTV, or someone seeking to replace an existing TV with a smaller-
screen SDTV (that fits in their TV cabinet), or a lower-income
household needing a cost-effective solution for watching digital
signals while preserving the usefulness of their existing analog TV--
Thomson and TTE have a product to fit those interests and needs.
As the digital television transition moves to completion,
consumers, manufacturers, and retailers need the certainty of firm
deadlines to ensure that their investments in this transition will reap
the benefits long promised by the advocates of digital broadcasting.
The marketplace is responding impressively to this Committee's
approach of ``targeted intervention'' in key areas of the DTV
transition, and indeed, we believe that this intervention--including
the establishment of hard deadlines where needed--has provided
stakeholders with the requisite certainty to make critical business
decisions. The results speak for themselves: in the past few years: DTV
product sales have increased dramatically (and are projected to almost
double within the next year alone); prices for DTV products have
dropped precipitously; consumers have access to an increasing amount of
HDTV programming; DTV signals now reach almost every American
household, and critical progress has been made in the areas of cable
compatibility and digital broadcast content protection.
RCA was there with the introduction of radio. We pioneered the
launch of black-and-white commercial television service. We developed
the analog color TV system that will soon be retired, and our
technology forms the digital compression backbone of today's DTV
standard. Along the way, we also popularized two of the most important
home entertainment innovations in American homes: the home video
recorder and the mini-dish satellite receiving system. Our motto at RCA
is ``Changing Entertainment. Again.'' And we're ready to keep pace with
the products that America needs as we prepare consumers for the end of
the digital television transition.
I would be pleased to respond to any questions Members might have.
Mr. Upton. Thank you.
Mr. Roberts, welcome.
STATEMENT OF LEONARD H. ROBERTS
Mr. Roberts. Thank you. It is good to be here.
My name is Len Roberts. I am Chairman and Chief Executive
Officer of RadioShack Corporation, and I appreciate the
opportunity to appear before you on behalf of both RadioShack
and the Consumer Electronics Retailers Coalition, which we call
CERC, in order to discuss the digital television transition and
consumer education.
With a long retail history, 7,000 stores in the United
States, and with $4.8 billion in sales in 2004, RadioShack
prides itself on its close connection with customers. In fact,
our brand position is: ``If you've got questions, we've got
answers.'' And we take that promise very seriously.
In the analog-to-digital transition, we definitely share,
we believe, in the responsibility to minimize the impact of the
transition on consumers. RadioShack also is a founding member
of CERC and actually presently serves as its chairman. And
CERC's members are committed to helping our customers learn
about their digital TV options. But we also believe that in
order for retailers to provide the desired level of education,
a hard date for the transitions of completion must be set.
As we move into the digital era, retailers must respond to
the varying wants and needs of their customers. For many
customers, exclusion will be a new TV or a service or device.
But many customers will also enter the new era wanting to
preserve at least one legacy of analog television; and there
are challenges, problems, and opportunities presented by these
varying needs.
Consumers of video products in 2005 definitely face many
more purchasing decisions now than they did only a decade ago.
Customers must choose now from a wide array of display
technologies, screen formats, tuner options, and whether to
receive their broadcast over the air, by cable, or by
satellite. Such progress provides our customers with options to
meet specific needs and wants at a price that they can afford.
But it also requires us to provide increased customer guidance,
a difficult but, we believe, an important mission.
CERC and its members and the Consumer Electronics
Association and the FCC, as mentioned, developed a two-sided
card entitled ``Buying a Digital Television'', explaining
consumers' new options. We are cooperating with FCC to make
this tip sheet widely available, featuring the tip sheet on our
websites and offering it in our stores. The Consumer
Electronics Association and the FCC are working on printing
more tip sheets for further distribution nationwide.
In addition, we all train our associates to help customers
arrive at solutions that fit their needs. In fact, we pride
ourselves in our training, which we are constantly updating to
meet changing technology and societal needs, such as, in fact,
bilingual training of our associates.
Now, while we only sell televisions sized 27 inches and
under, now that is, RadioShack trains our sales associates to
sell the accessories that link television products sold by us
or others, like converters and antennas. Retailers serve our
customers best by ascertaining their specific needs and wants
in an interactive, detailed dialog.
The transition date is a huge uncertainty that we and our
sales associates and our customers face. Some now are
suggesting a warning label on all analog-only televisions, but
such a label could even further confuse and even mislead our
customers.
Here are things we have to consider.
First, right now, the actual cutoff date is--for analog
broadcasting, is a matter of pure speculation, making it
difficult to advise customers or to know which products to
carry.
Second, an analog TV may serve some customers well today.
While digital TVs are decreasing in size and price, many analog
sets still cost less, even with the added cost of a future
converter box.
And third, even with a hard date, a display with only an
analog tuner, or no tuner at all, could still be a good
purchase for some consumers, because it would still work with
cable and satellite boxes, PBRs, and other devices.
RadioShack and CERC believe a warning label about the
discontinuation of analog broadcasting might, in fact, be very
appropriate only once a clear and reliable date has been set. A
hard date for the transition would provide customers more
clarity about their choices, whether seeking new digital
products or seeking to continue use of their legacy products.
Retailers and manufacturers are working to ease the
transition to digital television. By July 1, 2007, every
television receiver of 13 inches or over and every VCR or other
device will have a dual tuner.
Now for users of legacy analog televisions, a box that
simply converts a digital signal to an analog signal is
necessary. These converter boxes will allow analog televisions
to display digital broadcasts, receive all multiplex channels
transmitted by digital TV stations, work with remote control,
closed captioning, broadcast flag, VCRs, and DBRs. In many
circumstances, both the reception and number of channel choices
for the analog viewer will be an improvement over their current
analog reception. With a hard transition date and the desire of
tens of millions to continue use of their analog TVs, we
believe the price for a simple converter box could drop as low
as Motorola's stated price of $67.
RadioShack, in fact, is currently working on its own
prototype converter box in this price range. However, without a
hard transition date, it is unclear when and where the product
will be needed and at what price it will be offered.
In conclusion, I will tell you that retailers will be best
ready, willing, and able to address our customers' needs with
the creation of a date certain for the transition whether they
seek a digital television or services or a converter box for
their legacy equipment.
Thank you for allowing me to express my opinion.
[The prepared statement of Leonard H. Roberts follows:]
Prepared Statement of Leonard H. Roberts, Chairman & Chief Executive
Officer, RadioShack Corporation
Good Afternoon. My name is Leonard Roberts. I am the Chairman and
Chief Executive Officer of RadioShack Corporation. I appreciate the
opportunity to appear before you on behalf of RadioShack and the
Consumer Electronics Retailers Coalition (CERC) to discuss the
transition to digital television, and in particular the important issue
of consumer education.1
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\1\ CERC's corporate members are Best Buy, Circuit City,
RadioShack, Target, Tweeter, and Wal-Mart. Its association members are
the North American Retail Dealers Association (NARDA), the National
Retail Federation (NRF), and the Retail Industry Leaders Association
(RILA).
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INFORMATION AND BACKGROUND
RadioShack is one of the largest retailers of consumer electronics
equipment in the United States, with sales of $4.8 billion in 2004.
RadioShack sells a wide variety of consumer electronics products and
services, including cellular telephones and service, computers, radios,
televisions and satellite radio and television services. In addition,
RadioShack is a primary resource to consumers for devices and
accessories that assist in household connectivity and networking, many
of which are manufactured and branded under the RadioShack name. With
approximately 7,000 company-owned and dealer stores nationwide,
RadioShack is unique in its reach to consumer electronics consumers--
94% of the U.S. population lives or works within five minutes of a
RadioShack store. Having been successful in this business for a very
long time, we understand that business must continually change to meet
the needs of consumers.
ROLE IN CONSUMER EDUCATION
As a retailer, RadioShack prides itself on its close connection
with customers, evident in our motto, ``You've got questions. We've got
answers.'' ' In the analog-to-digital transition, retailers
are the closest connection to the consumer. For this reason, we share
in the responsibility to minimize the impact of the transition on the
consumer. RadioShack, like other retailers, will increasingly
participate in the new market for digital displays and integrated
digital televisions. Indeed, in addition to HD ready and integrated
digital sets sized 27'' and below, and our new digital Cinego
projector, RadioShack also sells a variety of cables, connectors,
digital tuners and other devices for satellite, cable and over-the-air
use.2
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\2\ The new Cinego, retailing in the $1,300 range, is a combined
DVD player, sound system, and projector. It will produce images of 27''
to 140'' and can be connected to a digital tuner for television
viewing.
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RadioShack is also very focused on assisting the millions of over-
the-air consumers who initially may not replace one or more of their
analog televisions with a digital product. These consumers will either
be reliant on the availability of digital-to-analog over-the-air
converter boxes or will need to subscribe to a cable or satellite
service.
RadioShack is a founding member of the Consumer Electronics
Retailers Coalition (CERC), and presently serves as its chairman.
CERC's members are committed to helping our customers learn about the
DTV transition, and the options and benefits that it will afford them.
We are rising to meet the challenges, problems and opportunities posed
by the transition. However, we also believe that, in order for
retailers to provide the desired level of education and guidance to our
customers, Congress, or to the extent possible the Federal
Communications Commission, must set a hard date by which the transition
will be complete. Should Congress additionally decide that a subsidy is
necessary in order to facilitate the purchase of a converter box, other
device or service to preserve television viewing, RadioShack and other
retailers will also be ready to respond to that demand.
As we move into the digital era, retailers must respond to the
varying wants and needs of their customers. Many customers will enter
this new television era with one foot in the digital world, while one
foot remains in the analog era. Some customers will wish to purchase a
new digital device and retailers must be able to provide products that
suit these customers' needs. Some of these same customers, as well as
others, will enter the new era intending to preserve the use of at
least one legacy analog television. Retailers must respond to that need
as well. I focus the remainder of my testimony on the challenges,
problems and opportunities presented by these varying needs.
THE CHALLENGES
The first challenge is to help customers understand what is going
on, how it will affect them, and how to use new choices to their
advantage. A consumer of video products in the year 2005 faces many
more purchasing decisions than he or she did only a decade ago. A
customer must consider:
Transmission and Display formats--High Definition; Enhanced
Definition; Standard Definition--digital (progressive);
Standard Definition--interlaced (digital or
analog).3
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\3\ Transmission may be in one signal format but display in
another.
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Program and screen formats--Widescreen aspect ratio (16x9) or
``traditional'' aspect ratio (4x3).
Signal acquisition--Antenna; cable; satellite; and now ``wireless,''
and ``broadband'' variations.
Tuning, authorization, and payment--In the receiver; in a ``set-top
box'' or PVR or other device; or through a ``CableCARD''-
enabled set that allows purchase of HDTV channels without a
set-top box.
Types of displays--``Traditional'' and ``slim'' cathode ray tube
(direct view and rear-projection); LCD panel; plasma panel; LCD
rear-projection; DLP rear-projection; LCOS rear-projection; and
DLP and other projectors.
Types of storage devices--VCRs; DVRs (removable media); PVRs (non-
removable media) and variations (PCs, game players, hand-held
devices).
Types of interfaces between devices--composite analog; component
analog (SD); component analog (HD); DVI/HDMI; Firewire; USB;
wireless variations; and associated forms of copy protection
which triggers only for certain programming.
This wide array of features and facilities represent progress and
we would not want to do without them. They allow customers to find
something that fits their needs at what are becoming increasingly
reasonable prices. But the availability of such a wide array of
features requires retailers and manufacturers to provide increased
customer guidance and that is a difficult but important mission for us.
CERC and its members have been pleased to enter into a private and
public sector partnership with the Consumer Electronics Association
(CEA, of which RadioShack is also a member) and the FCC. Together, CEA,
CERC and FCC staff developed a 2-sided card entitled ``Buying a Digital
Television,'' containing concise definitions and summaries of new
options. RadioShack and other CERC members feature the ``tip sheet'' on
their websites, as do CEA and CERC on their own sites.4 To
further show support for the Commission's effort, the card includes the
logos of the FCC, CEA, and CERC. Both CEA and CERC agreed to cooperate
with the FCC in making this ``tip sheet'' available to sales associates
of any interested retailer (whether or not a CERC member) and to
interested customers.5 Additional steps we have taken thus
far include:
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\4\ The link to this card (in side-by-side format) on RadioShack's
product web site adjoins the product description of all of our DTV-
capable displays: http://www.radioshack.com/images/rebates/
DTV_Tip_Sheet.pdf.
\5\ In addition to these steps, the FCC has implemented consumer
education efforts through its www.dtv.gov website and its toll free
consumer call center. See Federal Communications Commission's Media
Bureau Staff Report Concerning Over-The-Air Broadcast Television
Viewers, MB Docket 04-210, February 28, 2005, at 22 (OTA Report).
Electronic distribution. RadioShack instructed each of its 7,000
stores to post a side-by-side copy of the ``tip sheet,'' and to
make copies available to interested customers. Other CERC
members have also distributed the tip sheet electronically to
their stores. RadioShack also printed and distributed at its
own cost a ``tear sheet'' pad of the tip sheet to each of its
stores.
Printing in retailer magazines. The North American Retail Dealers
Association (NARDA), a board level member of CERC with 1,000
members, published a front-page article that ended in a full
page rendering of the ``tip sheet.'' We understand that a CEA
affiliate, Professional Audio-Video Retailer's Association, has
made a similar magazine publication.
Distribution to stores. CEA and the FCC are working on printing ``tip
sheets.'' CERC members who have not distributed them
electronically have committed to receiving these printouts in
bulk, delivering them to their individual stores nationwide and
making them available to sales associates and customers alike.
The retailers' main obligation, of course, is to train our
associates to guide customers through the choices they face, and to
help them arrive at a solution that fits their needs. We pride
ourselves on our training, which we are constantly revising and
updating to meet changing technology. For RadioShack, in areas with a
large Hispanic presence, the bilingual training of our sales associates
is critical to our success and with stores within five minutes of where
all Americans live or work, this is a core part of our training
process.
With many conveniently located stores of compact square footage,
RadioShack markets televisions sized 27'' and under and the accessories
and interfaces that link television products into up-to-date home
networks. Because of our focus on improving interconnectivity in the
average consumer's household, we must train our sales associates not
only on our own products, but on the workings of other products and
technologies as well. The goal is to better serve our customers.
Consumer electronics retailers serve our customers best by trying to
``qualify'' the customer--ascertain his or her needs and wants, home
room size and space, viewing and recording practices, potential for a
home network, and budget. We then proceed through a series of
questions. What is your programming preference? How do want to receive
it--off air, cable, satellite, Internet? Do you want the option of
moving programming throughout the house? What devices do you already
have? How many of those would you like to keep? How important is sound;
do you want all your products linked to a home theater receiver and
speakers? Do you know about HDTV? Will you want to record HDTV? The
sales associate then identifies the combination of display formats and
features, signal acquisition choices, and home network options that
give the consumer what he or she needs. Today, unless the consumer has
already firmly decided upon a specific purchase--and with the aid of
Internet research, many have--retailers can not serve the consumer by
offering products on an isolated basis. Retailers must determine how
all of the devices will fit together and to do this the retailer has to
consider the whole picture.
THE PROBLEMS
The uncertainty currently surrounding the transition date is the
most significant hurdle that we and our sales associates face when
working with customers interested in video products. Some have
suggested that we should simply start putting a ``warning label'' on
all analog-only television products. But in the present circumstance,
we believe that such a label could only further confuse, and even
mislead, our customers. Here are the things we have to consider:
First, the present laws and regulations make the actual cutoff date
for analog broadcasting in any specific local market a matter
of pure speculation, dependent on market developments,
regulatory definitions, and legal judgments, as to each
locality, that have not yet occurred. Today, for any particular
locality, it could be equally valid to project a cutoff date of
one year, five years, or ten. Retailers cannot responsibly
advise customers or be expected to know which products to carry
on this basis.
Second, an analog television may well serve a customer who can not
make a significant investment in a television set today. Until
smaller digital sets match the low prices of the smaller analog
televisions, the total cost to the consumer to purchase certain
analog sets is still less, even with the additional cost of a
future converter box that would be added once the transition
occurs. With the introduction of digital sets 27'' and below,
these price points will begin to change.
Third, even after the date is known, a display with only an analog
tuner--or even with no tuner at all--could still be an
attractive purchase for some consumers. Such products would
still work with commonly used analog interfaces from cable
boxes, satellite boxes, personal video recorders, DVD players,
game players, and analog VCRs.
RadioShack's and CERC's view--which we believe our vendors and our
retail colleagues generally share--is that it would be appropriate to
consider an advisory label about the discontinuation of analog
broadcasting, only after a clear and reliable date has been set, and
the circumstances under which converter devices will be available are
known.
With a hard date for the transition, retailers would be able
provide customers more clarity about their choices.6 This is
true for consumers seeking new digital products, as well as those
seeking to continue use of their legacy products. Many consumers will
likely purchase digital televisions, some will subscribe to cable or
satellite for the first time and for many households, the digital-to-
analog over-the-air converter box will be the desired option. With the
predictability of a hard date, retailers would be better able to
educate consumers and provide certainty as to which consumer
electronics products best fit their needs.
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\6\ See the Media Bureau's OTA Report confirming that a near-term
date certain would provide a clearer, more effective message to
consumers. OTA Report at 37.
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THE OPPORTUNITIES
Retailers and manufacturers are working on products that should
ease the transition to the digital television. Here are four
developments that should assist consumers in understanding their
choices of digital televisions or devices:
First, starting on July 1, 2005, all large-screen sets (36'' and
over) that have analog, NTSC tuners will also have digital
broadcast tuners. The transition to this requirement via a 50%
phase-in has been expensive and difficult for our vendors, but
a clear 100% obligation will help us explain this product
category to consumers: any large-screen display with an analog
tuner will have a digital tuner as well.
Second, for intermediate size receivers of 25'' to 36'', CERC and CEA
have petitioned the Commission to move the effective date of
the 100% rule up by four months, from July 1, 2006, to March 1,
2006--less than a year from today.7 Having digital
tuners in television receivers in this size category should
greatly increase the number of homes that can receive digital
broadcasts.
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\7\ Otherwise, this category would be subject to a 50% rule
starting July 1, 2005. Such a rule, in the large screen category, has
caused marketplace disruptions, confused consumers, and initially has
driven supply of products without digital tuners up and demand for
products with digital tuners down--contrary to the direction that, as a
policy matter, all, including CERC, would like to see. See CEA/CERC
Petition for Rulemaking, In the Matter of Digital Television Tuner
Requirements, ET Docket No. 05-24, November 5, 2004.
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Third, by July 1, 2007, every television receiver of 13'' or over,
and every VCR or other device with an analog tuner will have a
digital tuner as well. These devices will have the capability
of permitting a display that is already in the home to receive
digital television.
Finally, there is the advent of the CableCARD TM--a ``plug
and play'' device which allows consumers to select and pay for
a cable operator's scrambled digital programming without the
need to rent a set-top box. About 70% of homes are attached to
cable, although not every receiver in every home is actually
connected to cable. A CableCARD receiver in such a home might
be used initially as a primary viewing platform, and
subsequently in another room where it can operate either using
the cable or its off-air tuner. Either way, it brings that home
into the digital fold. And RadioShack in particular is looking
forward to offering multi-purpose products, such as game
players, PVRs, computers, etc., that will also function as
cable navigation devices. The CableCARD sets--which will all
have digital off-air tuners--provide an economical portal to
bring less expensive, mid-size sets into the digital age,
whether via cable or antenna.8
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\8\ In the large screen category, the cable industry has been
reluctant to promote CableCARDS, because it can not yet offer video on
demand and other interactive services, and possibly because its own
set-top boxes do not rely on them. But help should be on the way in
these areas as well: the consumer electronics and cable industries are
negotiating a ``Phase II'' plug and play framework, which would bring
interactive services into market-driven products. An FCC regulation is
also due to take effect on July 1, 2006, that would require cable
operators to rely on the same ``security interface'' (today, a
CableCARD) made available for use by competitors. CERC has long
supported this requirement as essential to a level playing field for
devices in the digital age. CEA and CERC have urged the Commission not
to relax this requirement in any way. See Ex Parte filing by CEA/CERC
in the FCC proceeding, CS Docket No. 97-80, March 1, 2005.
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Likewise, for the consumer who wishes or needs to continue the use
of a legacy analog-only television, RadioShack and other retailers
intend to provide a simple converter box that converts a high
definition signal to an analog signal.9 However, the current
statutory provisions guiding the transition timeframe do not provide
enough information to manufacturers and retailers as to when they
should have converter boxes available in the marketplace. Without a
date certain for the transition's completion, it is unclear when and
where the product will be needed and at what price it will be offered.
RadioShack believes that market forces will play an instrumental role
in minimizing both inconvenience and cost to the consumer, but only if
the market is provided necessary certainty as to when the conversion
will occur.
---------------------------------------------------------------------------
\9\ According to statistics cited in the FCC's OTA Report, there
could be as many as 73 million OTA, mostly analog televisions in the
market today. OTA Report at fn. 15.
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Currently, there are only a few converter boxes that simply convert
a digital over-the-air signal to NTSC analog signal. Most converter
boxes available to consumers today provide more capabilities than are
needed for an analog television set that does not receive cable or
satellite programming. With significant consumer demand, RadioShack as
a manufacturer and retailer anticipates the need for a converter box
that simply converts an ATSC terrestrial digital broadcasting signal to
an analog NTSC signal. Such a box would employ a tuner without
including all interfaces (such as component video for an HDTV display,
digital audio outputs, or HDMI outputs, etc.). The box would merely
change the ATSC signal to NTSC analog and provide a NTSC ch. 3/4 RF (F-
connector) or composite video/audio output to the
television.10 These converter boxes will allow analog
televisions to display digital broadcasts, but not in full digital
quality. As noted by FCC staff recently, converter boxes will likely
receive all multiplexed channels transmitted by DTV stations, work with
remote control, closed captioning, a PSIP-based programming guide, the
broadcast flag, VCRs and DVRs, and meet all safety and Energy Star
requirements.11 It is also noteworthy that in many
circumstances, both the reception and number of channel choices for the
analog viewer will be an improvement over their current analog
reception.
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\10\ In addition to the need for this minimum-capability box, it is
important to note that there will likely be a range of converter boxes
available in the market with a range of capabilities. For example,
there are already a number of consumers who have purchased HDTV
monitors and who receive television signals only over-the-air. Unless
they choose to subscribe to an MVPD when the transition occurs, they
too will need to purchase a digital over-the-air converter box for
their HDTV monitors.
\11\ OTA Report at 18.
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If the transition occurs on a specific date, RadioShack anticipates
that given the desire to continue the use of tens of millions of analog
televisions, the price for a simple digital-to-analog converter box
with minimum capabilities could drop as low as Motorola's stated price
of $67 or even LG's price of $50.12 RadioShack is currently
working on its own prototype converter box which will be in this price
range assuming adequate demand, and which could also be packaged with
an antenna as necessary.13
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\12\ Testimony of Carl J. McGrath, Motorola, Inc., before the
Subcommittee on Telecommunications and the Internet, House Energy &
Commerce Committee, July 21, 2004; Testimony of Dr. Jong Kim, LG
Electronics, Inc. before the Subcommittee on Telecommunications and the
Internet, House Energy & Commerce Committee, February 17, 2005.
\13\ Over-the-air viewers currently rely on UHF/VHF antennas to
receive an analog signal. OTA digital viewers will be able to rely on
existing UHF antennas to receive a digital signal. RadioShack believes
that in certain circumstances, consumers who today do not receive a
clear analog picture, may also need additional equipment--an amplifier
or an outdoor antenna--to receive the digital signal. The placement of
broadcast transmitting antennas may also affect consumers' antenna
needs to some extent.
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As a final note, RadioShack would like to emphasize to the
Committee its readiness and ability--and that of our CERC members--to
address all consumer needs as the transition approaches. RadioShack
will provide accessibility and education to consumers, whether they
seek to purchase a digital television or other digital device, or need
assistance in purchasing a converter box and/or antenna for their
legacy equipment. In the event that a subsidy is provided to certain
households, RadioShack believes its consumer presence and
accessibility--and that of other retailers throughout communities in
the U.S., would ease burdens associated with the implementation of the
subsidy.
Thank you for the opportunity to share my views with the
Subcommittee.
Mr. Upton. Excuse me. Thank you all for being here, and we
are going to proceed now to questions from members on the
panel, not to take more than 5 minutes.
Mr. Roberts, and to all of you, I think it is no secret. I
am on record as supporting a hard date. I know my chairman, Mr.
Chairman Barton, is very much in support of a hard date. And
this committee, at least I would like to think, will proceed at
some point a little bit later this year with legislation to
define that hard date. It is part of that legislation--I, too,
support your idea that we are going to need a label for the
analog sets that are in our retail stores across the country,
and I would agree with you, from what I heard, that we can not
do that label, whatever it will say, until we actually have the
date certain established. And you indicated in your testimony
that that is something that you support. I would like to ask
the other three members of the panel if they also support a
label on current analog sets so that the consumer, when they go
into RadioShack or Best Buy, wherever they might go, Sears,
they are going to know that they are going to need some type of
equipment to transfer to digital as of whatever that certain
date is.
Mr. Roberts. Could I----
Mr. Upton. Yes, go ahead.
Mr. Roberts. Could I just qualify? I mean, if that label
was----
Mr. Upton. I know you didn't like me to say Sears or Best
Buy.
Mr. Roberts. Oh, no. Well----
Mr. Upton. RadioShack is first.
Mr. Roberts. You know, if that label has to say in 4 years,
you know, this analog TV may not be operative, then I have a
problem. If you are talking about a shorter timeframe than----
Mr. Upton. Yes. Well, I am. I want the date on that label
as well.
Mr. Roberts. Yes.
Mr. Upton. And we will define that. I understand we will
probably not write the language, but I think we will dictate to
the FCC in terms of what we would like it to encompass. They
will obviously have to have a comment period, but I would want
that date, that established date on the label.
Mr. Arland.
Mr. Arland. Yes, I would like to take out ads with the
date. I think that would be great. Yes, one of the
misconceptions, though, is that after that date that this
product is no good. It was 51 years ago that RCA introduced the
first color TV. We have two of them in our headquarters that
still operate just fine, and with the addition of a set-top
box, they will keep operating.
Mr. Upton. That is right. That is exactly right.
Mr. Arland. So consumers will still be using their analog
televisions to watch satellite programming, to watch cable, to
play DVDs, to play VHS tapes, maybe Internet video, who knows.
So we would support a lengthy discussion about a label so long
as it does have the date certain, which is, I think, what we
are all asking for.
Mr. Upton. Well, and part of that is, and Mr. Barton has
confessed this already, that he bought himself an analog set in
December, and he had a $300 gift certificate, and I will bet
that he wishes that he bought that digital $300 set that is now
on the right.
Chairman Barton. I didn't see that one.
Mr. Upton. Yes. All right. I am going to yield my time to
my chairman, Mr. Barton.
Chairman Barton. There are good days and bad days.
Mr. Upton. He told me that we would be able to and that is
with the condition that we are going to get sports now under
the authority in the Telecommunications Subcommittee, is that
right?
Chairman Barton. It is a subject under advisement.
I apologize for interrupting. I have a Washington Post
reporter I have been trying to meet with for 2 weeks waiting
down in the annex to interview me and a plane to catch and
another subcommittee hearing going on.
So my basic question to this panel is that is it
technically possible, if we do a hard date of December 31, 2006
for the digital transition, to actually come up with the
technology in a cost-effective fashion to take care of those
analog homes that literally will go dark if we make that
transition at that date? That is my question. I will start with
my friend from RadioShack, Mr. Roberts.
Mr. Roberts. Thank you, Mr. Chairman.
We can make that date. We need 12 months from the time that
legislation is effective and the public is notified, we can
make a date in 12 months, so that would put us--if you want----
Chairman Barton. If we pass a bill some time this year----
Mr. Roberts. That is right. We can get it by December 2006.
Chairman Barton. Okay.
Mr. Arland.
Mr. Arland. Yes. Mr. Barton, I am from RCA, and we are
showing today a standard definition digital television on the
right, an analog television on the left that will be out this
September at under $300, so----
Chairman Barton. That is great.
Mr. Arland. [continuing] we are ready. I am also showing a
converter box that could ship as soon as we have a firm date,
as soon as this September or October, at $125. You know, if you
order 5 million of them, the price will go down.
Chairman Barton. How about 20 million?
Mr. Arland. Well, 20 million would be the same way. I would
prefer to sell this product through Len's stores and the other
members of his group and other retailers. I think, you know, we
have an opportunity to educate people about what is going to
happen. So as soon as you are ready, believe me, we are ready.
Chairman Barton. Okay.
Mr. Mirabal.
Mr. Mirabal. Yes, thank you, Mr. Chairman.
Today, I testified that possibly the most difficult problem
in the transition is going to be to address the needs of the
Latino community. Because of language issues, economic issues,
and for many Latino families, they have an average of three
television sets. And for them, TVs are not junk. We believe
that any hard date that you select is going to have to
anticipate that it is going to take the government, in our
experience, a while to produce an adequate campaign in Spanish,
a campaign that uses non-traditional media means: Spanish-
language newspapers at the local level and Spanish-language
television. And to engage those companies that are, in fact,
selling televisions, like RadioShack, as part of that campaign.
There should be a label on any TV sold today that says you may
need additional equipment if you want to use this after the
transition. I don't think we need to have a firm transition
date to put that label on those sets for all Americans, but
particularly for Latinos who have specific problems and who are
going to have a much more difficult time in dealing with the
transition.
Chairman Barton. But once we, if we do this hard date
legislation and we put the labeling in Spanish universally, the
individuals, the groups that you represent, do you think that
they will be able to communicate that and we will be able to
get people to make arrangements?
Mr. Mirabal. In my testimony, we offered to help as much as
possible. We support the transition. We believe that there is a
way of reaching those individuals who need to be reached and
the way they need to be reached to do this the right way. We
hope that Congress makes sure that government works with our
organizations and others out there to get this done, because we
believe that it is going to improve the television service for
all Americans, including the community that we represent.
Chairman Barton. Right.
Mrs. DeSalles. Just push that button. There you go.
Ms. DeSalles. As I testified earlier, our concern is not
necessarily with the date but with the development of a
comprehensive public education system, at least 1 year in
advance so that people can prepare for the transition,
particularly older people who probably have more of these sets
that would go dark without adequate knowledge. It is vital that
they know exactly what is going to happen on the transition
date. So it is the educational system that needs to be
addressed. If the committee sets a firm date, I strongly urge
that that be a part of allowing at least a year for that.
Whether or not that could be developed by that time, I don't
know, but AARP stands firm in our commitment to assist in
trying to get the word out.
Chairman Barton. Well, I am AARP eligible. You know. I am
55. In some ways, philosophically, yes. And my mother is 80,
and she is one of those that is going to make me do it. She
won't----
Ms. DeSalles. Absolutely.
Chairman Barton. [continuing] go to RadioShack and buy the
box, but she will make sure that her son----
Ms. DeSalles. Exactly.
Chairman Barton. [continuing] gets down there to do it.
Ms. DeSalles. Now, you mentioned you were AARP eligible,
but you didn't say whether or not you were a member.
Chairman Barton. I am not going to----
Ms. DeSalles. I am going to have to approve you.
Chairman Barton. I shouldn't have said that. I am not
currently a member.
Mr. Upton. We know you well enough that we sort of figured
that out.
Chairman Barton. Well, I apologize for interrupting. I
appreciate you, Mr. Chairman, letting me interrupt.
Thank you all for appearing. This is a very serious issue,
and what I pick up is, on the equipment side, that sooner is
better, and on the consumer side, whatever we decide to do,
give you enough notice that you can educate your constituencies
to what needs to be done.
Ms. DeSalles. Absolutely.
Chairman Barton. Thank you, Mr. Chairman.
Mr. Upton. Mr. Gonzalez.
Mr. Gonzalez. Thank you very much.
And I know a date certain, a hard date, whether it really
brings all of the different stakeholders together in order to
accomplish what Congress has been trying to accomplish for a
number of years is really questionable, and I don't know about
whether a year or so--but I think it has to be carefully
weighed. And I think Mr. Mirabal's testimony about how this
impacts the lower economic rung families is really important,
especially in my District and then of course, the language
consideration.
What I don't understand is how we got here, but we are
here, and not to rush anything, like, they say, rush to make a
mistake, because I am not really sure how we are going to
accomplish this. The manufacturers weren't in any hurry to make
sure that most of the sets that are out there today at any of
the retailers were digital. That didn't happen. About the only
ones that came into compliance were the broadcasters that spent
the money to actually be able to broadcast it, but then we have
got problems with that, because now they are telling the cable
companies not to carry the signal. They are not going to pay
for it and so on. So I just don't see that this movement is
going in that direction. How we got to where we are is really a
mystery.
We were able to do something else with something--with
another item that American families hold sacred, and that is
the automobile. Do you remember when we switched over from
leaded to unleaded? How in the world did we do that? My
understanding, after talking to Mr. Dingell, was that there was
a heck of a lot of cooperation among all stakeholders so that
at the end of the process you didn't have stakeholders--or not
stakeholders, you had consumers holding the bag. In this
process, I guarantee you, you will have the consumer holding
the bag. And so I think we have to be very, very careful. And
if we set this particular date out there--I guess the real
question is--I don't have questions for AARP or my friend Manny
or anything, but it really goes to the retailers and to the
manufacturers. What were you all thinking? Why did it take so
long? I mean, we are bragging about this--and I am grateful for
it, but why so long? And I know I wasn't here when they started
saying, ``Well, we are going to start with a certain size set
and mandate this,'' and then there was something else about 85
percent, which I have no idea how you ever get a fix on that 85
percent number. But what was going out there in the industry
that you all didn't find persuasive enough for you all to
voluntarily move a lot quicker than where we are today?
Mr. Roberts. Let me, and I think that is a great question,
by the way. As a retailer, we respond to consumer needs. That
is No. 1. And our sweet spot, and again, you know, I represent
CERC with the entire industry, but I want to speak on behalf of
RadioShack. We are in every neighborhood in America, and you
know, we pride ourselves in the fact that when it came down to
the computer, RadioShack was the one that educated the public
on what a computer did; or calculators and the CB radio and
every kind of new technology. But right now, the analog TV is a
value. I mean, our sweet spot, right now, you know, for much of
the Latino community, too, is from $70 to $300. I commend
Thomson, by the way, for finally developing a digital TV that
looks like it is going to be under $300. That is not our sweet
spot. That is not what people could afford. So what people
could afford, in our stores, are TVs that are analog TVs that
are in the $80, $90, $110, $150 market. And the digital was out
of their range. As that price gets down, I think it is going to
happen, as dual tuners become mandated, I believe the price is
going to go down. And all of that helps out. But until that
time, the reason why we haven't pushed it is because the
consumer can't and has not been able to afford it.
Now we have a situation now with the analog TVs they have.
Perhaps if we do this right, we can get these converters down
to $70 to $80 and they can afford it, or maybe with some
government help. But, where we are is because it is really a
price point, the value. And again, these TVs still work with
satellite. They work with, you know, cable. They work with
DVDs. They work with VCRs. There is real value in these
products, even as analogs.
Mr. Gonzalez. Mr. Arland.
Mr. Arland. Well, I am going to ask Mr. Passarelli to bring
up a couple charts, because I think it might be helpful to put
some history on this. You know, when I was here 4 years ago, I
brought the circuit boards from our first set-top box, because
Fred had a great question: why is this so expensive? It was
$550. And so now we have got it down to $125. If we can get a
date, I think if we have a date, then, you know, retailers will
be interested in this kind of product, because today, there
isn't much market for this product. There is no compelling
reason for consumers to buy it.
[Chart.]
If I go back in history a little bit and I look at, with
this chart, the green bars on this chart show you analog
television sets. And Mr. Markey made this point this morning
that if you look in 2004, 23 million analog televisions were
sold. That is true. But the blue bars represent the growing
impact of digital television. And digital last year was 7.3
million. And look what happens in 2005. We are going to sell
twice as many digital sets as we do analog.
I will come back to the same point Len just made. Why are
we selling 23 million analog sets? Half of those are
televisions smaller than that one. They are 19 and 20-inch
sets. They sell for under $175. It is simple mathematics. On
the one hand, we are pricing to get that set-top box inside the
television. The cheapest we can do it today is 300 bucks. And
that is in this fall.
[Chart.]
So the transition is going to shift. There is going to be a
change. And this is the chart that CEA has been using to show
what is going to happen in the out-years. And everything in
green represents opportunity for our industry in digital and
the blue is the analog that is going to fall off to almost
nothing, especially as the tuner mandate kicks in. So I guess
my answer is A: it is expensive, as Len said; B: it is getting
cheaper; C: there are many cogs in this transition. It is not
just the price of TV sets. It is having enough broadcasters on
the air who are sending signals that people actually want to
see. Today, we have 200 broadcasters still not on the air, 7
years after this transition supposedly started. I hope they
will be on the air by the time they are supposed to, July 1 of
this year. I am sure they will be.
Mr. Gonzalez. Thank you very much.
My time is up.
Mr. Upton. Mr. Terry.
Mr. Terry. Thank you, Mr. Chairman.
Mrs. DeSalles, in helping through the transition, first of
all I want to thank AARP for stepping up and helping with the
transition, helping with the education process, absolutely a
necessary component. So I thank you and AARP for that.
As a policy, though, I lean more toward means testing on
who we help with the set-top box. I disagree with the
philosophy that every person who receives their TV from over-
the-air as opposed to through cable or satellite should receive
a government-purchased set-top box. I need to go back and read
your testimony, but just to clarify for me again, where would
AARP be on means testing only providing set-top boxes for low-
income seniors?
Ms. DeSalles. AARP does not have a policy on that position.
We do believe, though, that the government has imposed this
transition on the consumers, thereby it--forcing them to incur
costs, so we would--we feel that government should use some of
the money that is recouped through spectrum to subsidize some
of the charges, but we don't have a set position on who should
get a subsidy or exactly what that subsidy--what form that
subsidy should take.
Mr. Terry. All right.
Mr. Mirabal?
Mr. Mirabal. Yes. Most of the sets, as Len has already
pointed out, which are going to require these converters, are
sets that have been purchased by many individuals who can't
afford digital TVs. They can't afford expensive TVs to begin
with. Having them required to submit to means tests is not the
answer to this. We are opposed to that. What this becomes for
individuals is a tax. If they have to pay for it themselves, it
is a tax. And it is a tax that the government ended up creating
on them. And I think that that is the way it is going to be
seen. So you are talking about a means test for a population
which probably mostly will all qualify for it. Going through
that exercise, I think, is unnecessary. What the government
needs to do is seriously consider using the portion of that
revenue that is gained through spectrum sales and using that to
help those individuals who have no choice but to purchase
analog all of these years who aren't going to throw those
televisions away because they last 15 years. And whether the
date is set a year, or 2, 3, 4, or 5 years, those TVs will
still be in the home. And they will primarily be used to get
most of their information.
Mr. Terry. So your position would be that every consumer
should get a set-top box paid for by the government? I will
say----
Mr. Mirabal. I think there is a limit.
Mr. Terry. I disagree with you, and I don't think watching
television is a constitutional right.
Mr. Mirabal. Well, I think there may be a limit.
Mr. Terry. By the way, the conversion----
Mr. Mirabal. [continuing] that--yes.
Mr. Terry. [continuing] from leaded gasoline to go through
catalytic converters, which added several hundred dollars to a
car, you didn't see the government writing checks to every new
car purchaser, either.
Mr. Mirabal. No, cars cost a lot more money.
Mr. Terry. I also want to say this is publicly owned
spectrum, free over the air, so you know, if we are going to
spend more money than the spectrum is worth to converter boxes,
then I think we need to rethink either the transition or
whether there should be free, over-the-air television anymore.
Mr. Mirabal. Well, that is----
Mr. Terry. Now let us go to warnings.
I don't see any way possibly to do a logical warning
without a specific hard date. We seem to have, again, maybe
consumer groups that disagree with my position, but Mr. Arland
and Mr. Roberts, does it have to--the warning to me can only be
effective if you have a hard date. Can you have a warning
without a hard date?
Mr. Roberts. What does that warning say? This product may
not work 1 day and the government may legislate against it.
Your analog signal may end. I just don't think that is
actually, I don't think that is, again, valuable for consumers
who really can't afford a digital product.
Mr. Terry. Well, I think it puts a scare into the
consumers, too, and may confuse the situation.
Mr. Arland?
Mr. Arland. I think it would be a mistake to advance the
digital transition through fear and anxiety. You know, our
industry is interested in promoting our products, not throwing
negative labels on things. And I think there are some positive
things to use to promote better picture quality, multi-casting
reception. You know, there are a number of things that can be
done, but if the objective is to advise people of when a
functionality is not going to work, they have to know when that
is.
Mr. Terry. I agree that I think we have an obligation, if
there is a date certain.
Mr. Chairman, are we going to have a second round of
questions?
Mr. Upton. Let me go to Mr. Wynn and Mr. Bass and then I
will come back to you. Yes, we can have a second round.
Mr. Upton. Mr. Wynn.
Mr. Wynn. Thank you, Mr. Chairman. I do have a couple of
questions, because I think I disagree, respectfully, with my
colleague. You are in the business of selling TVs to people now
and for some indefinite period that are analog that are going
to ultimately require a converter box. Why can't you tell them
that?
Mr. Roberts. First of all, when? By the way, we do educate
the consumer in terms of----
Mr. Wynn. Let me----
Mr. Roberts. Yes.
Mr. Wynn. I am fine with the concept of a date certain. I
am probably going to support it, although possibly not. But my
point is why can't you tell--how definitive is that? Why can't
you tell the consumer that you are selling--particularly the
middle class consumer who may not get the benefit of the
sliding scale, that you may have to get a converter box,
because the government is contemplating changes in regulations
that will require a converter box? I am very concerned that we
are selling a product today that we know, with a reasonable
degree of certainty, within at least the next 3 years, is going
to require a converter box. Why can't you tell them that?
Mr. Roberts. Well, I mean--somebody just handed me--we hand
this--you know, we have the tip sheet.
Mr. Wynn. In the short answer, you can.
Mr. Roberts. We can and we do, yeah.
Mr. Wynn. Okay. That is good enough.
Mr. Roberts. Okay.
Mr. Wynn. Okay. Now I would like to ask Ms. DeSalles a
question. Do you believe, assuming my colleagues have--there is
some sort of means test, do you believe that the subsidy should
go for every TV in the house for those people who are eligible?
Ms. DeSalles. No, I don't think that we would support that,
because households can, as my colleague has said, households
could have three or four different televisions, particularly in
low-income households where that may very well be the only
source of entertainment in the house.
Mr. Wynn. So your view would be that they would then be
responsible for----
Ms. DeSalles. Well----
Mr. Wynn. They would only get one and they would have to
buy the others?
Ms. DeSalles. For at least one, yes. We would, we could
support a government subsidy of that nature.
Mr. Wynn. Of one but not any more?
Ms. DeSalles. No, I am not really saying absolutely one and
absolutely not any more, but----
Mr. Wynn. You have got a poor family. They have got a
couple of kids. They have two TVs, three TVs. Through no fault
of their own, they bought an analog TV this year, because there
was no notice on it, and now they are confronted. They fall
under the means testing. Should they get one subsidized
converter box, or should they get converter boxes for all of
their TVs?
Ms. DeSalles. As I said in my earlier testimony, television
has gone beyond merely entertainment, particularly for older
people. It is a connection to the outside world, and the news
and----
Mr. Wynn. One or more? Should they get one or more?
Ms. DeSalles. We don't have a position developed----
Mr. Wynn. Okay. That is fine.
Ms. DeSalles. [continuing] on that. But I will----
Mr. Wynn. I will accept that answer.
Ms. DeSalles. [continuing] say we could support one.
Mr. Wynn. Okay. Let us see.
If you--let me go back to you, sir, Mr.----
Mr. Arland. Arland.
Mr. Wynn. [continuing] Arland, yes. You have just said you
have a color TV with a life span of over 50 years.
Mr. Arland. Yes.
Mr. Wynn. Why do you need a date certain----
Mr. Arland. Well, I think we need to start----
Mr. Wynn. [continuing] to issue a warning?
Mr. Arland. It is an excellent question for two reasons.
One, within 28 months, this is not going to be an issue,
because every television that is sold as a television will have
to have the tuner anyway.
Mr. Wynn. Right.
Mr. Arland. By July 1----
Mr. Wynn. But right now, you are selling like hot cakes
analog TVs.
Mr. Arland. We are selling like hot cakes digital
televisions as well, but yes.
Mr. Wynn. Okay.
Mr. Arland. And the reason that it is cheaper, and the
reason that they are selling so well is because the ones that
are selling are the small screen sets in which incorporating
this is still a very expensive venture. We are going to be able
to make it affordable in 27 inch, but most----
Mr. Wynn. Below $300?
Mr. Arland. $300.
Mr. Wynn. Below $300?
Mr. Arland. Below $300. Under $300.
Mr. Wynn. How much? $250? $200?
Mr. Arland. I have competitors in the room, and I would
prefer not to tell them what----
Mr. Wynn. Fine. My question still remains. You are selling
analog TVs to some substantial degree. Why can't you give
people a notice?
Mr. Arland. What is the notice supposed to say, sir? 80 to
90 percent of consumers take their television home and hook it
to cable or satellite to which this issue becomes a non-issue,
so what am I supposed to tell them?
Mr. Wynn. That the government is contemplating regulations
that would require a converter box on their television within
the next 3 years or that within less than 3 years all new
televisions will be digital and the television you are about to
buy is not digital and you will have to have a converter box.
Mr. Arland. I think in order for this to be effective, we
shouldn't be scaring consumers. We should be providing them
with accurate information and a certain date.
Mr. Wynn. Is there an assumption that that information is
somehow ``scary'' or is it just useful information?
Mr. Arland. I--it scares me. I--you know, my--the product
that we sell a lot of, you are going to say, ``Don't buy this
because it might not work in 3 years.''?
Mr. Wynn. I didn't say don't say--don't buy it. Just say,
you know, be aware that you may have to buy an additional
device to make it work in 2 years.
Mr. Arland. Well, the reality is that it is exactly what
most consumers already do. They take it home and they connect
it to another device to watch TV. So we support the idea----
Mr. Wynn. For those consumers who don't, is there a reason
why you couldn't tell them that----
Mr. Arland. Yes, there is a reason, because we don't have a
date to put on the notice, sir, and that is--I mean, it is very
simple to us. We are happy to do that. As soon as we know when
analog broadcasting will be turned off, we will start.
Mr. Wynn. But in the meantime, you will continue to sell
TVs to unsuspecting consumers----
Mr. Arland. Well, you know, let me use my own household as
an example. My daughter has a TV in her room that she only
watches tapes on. We have another TV that people only play
video games on. They don't even use terrestrial reception. So
you know, you are asking us to do a lot of what-ifs. And we
have been. Len and I have been at this transition now for
almost a decade. Others in this room have been at it for longer
than that. As soon as we know some of the facts here, and as
soon as a date is certain, I think a label may be appropriate.
But until then, I am not sure what you want us to tell people.
Mr. Wynn. I see.
Okay. Those are all of the questions I have, Mr. Chairman.
Thank you.
Mr. Upton. Mr. Bass.
Mr. Bass. Thank you, Mr. Chairman. And I want to compliment
Mr. Wynn for his line of questions, because I think he is
hitting the nub of this thing right on the head.
It is a complex issue, but it may be a lot of
prestidigitation over nothing because on the one hand, you
really have had a hard date, with an exception, which may or
may not be met. I remember attending a hearing similar to this
one I think 2 or 3 years ago in which another major retailer
was testifying and said that he was troubled by the idea that
every single analog TV that he had on the shelf had the
potential to be obsolete or unusable in 3 years and yet was
unwilling to do anything at that time to even provide a
warning, notification, message, or anything or even go--and now
here we are, just a few months away from the conversion date,
and we are still moving--we are moving forward, and there is a
good example of it. That is, as I understand it, a digital--I
mean an analog TV with a converter in it, one of those boxes
inside it.
Mr. Arland. Exactly.
Mr. Bass. Otherwise, it is identical to the one next to it.
Mr. Arland. Yes, sir.
Mr. Bass. So what you are asking us to do is to come up
with a hard date, which we already came up with, but you want a
hard date with no exceptions at all. And then you are saying
that you are going to solve the problem, but you really haven't
demonstrated the willingness to do it to date. Yes.
Mr. Roberts. Something--I deal with--and my company deals
with is the everyday situation of consumers in our stores, and
I understand the line of questioning and I understand what you
are trying to get to, but the reality of it is that, first of
all, I can say retail may have a vested interest in keep
selling--up-sell to the consumer from an analog to the digital,
a higher price, more gross margin, whatever it may be. But the
facts are that, you know, up until hopefully, again, leaders
like Thomson can bring the digital TV down to $300, there are
folks that just can't afford that, and so we are left with the
situation saying it is not a question of--you know, if there
was a hard date, then we would tell them, ``By the way, in a
year or 2 years from now, this product will need a converter or
it will not work.'' That is simple. But without a hard date
there, there are folks that you can deprive of having a
television signal. They can't afford $500 or $600 or $700 for a
digital product today. There are no converters out there at
this price of $125 because no one is going to manufacture it
and no one is going to sell it until there is a hard date.
Mr. Bass. Mr. Arland, how many of those units do you have
to make in order to have the price at $125?
Mr. Arland. It is in the tens of thousands that we are
planning on.
Mr. Bass. And how many analog TVs are set up on broadcast
now, nationwide, do you know?
Mr. Arland. The number I heard this morning from another
witness was, like, 20 million.
Mr. Bass. So you are giving us a price for 10,000 when you
have a potential demand of 20 million?
Mr. Arland. I have no customer yet who will buy it, sir.
And that is part of what I am asking for. You know, my--Len's
company----
Mr. Bass. If we set a hard date----
Mr. Arland. If you set--okay.
Mr. Bass. If we set a hard date and let us say \3/4\ of
those televisions had to buy them, don't you think it would
be--you would be talking $25 instead of $125?
Mr. Arland. I don't know if it is $25.
Mr. Bass. You guys would be fighting like cocks with all of
the other manufacturers----
Mr. Arland. Sure.
Mr. Bass. [continuing] to get the lowest price. And Mr.
Roberts here would be nickeling and diming you to get the
lowest possible--you would be down to $25 in no time, don't you
think, if you had to make 15 million of them?
Mr. Arland. If I had to make 15 million of them,
absolutely.
Mr. Bass. Don't you think you are going to have to if we
set a hard date?
Mr. Arland. I hope so.
Mr. Bass. Okay. I guess I have said enough. I don't want to
be too mean to Mr. Roberts, because I am going to ask him to
sign a little note to the manager of my local RadioShack store.
I yield back, Mr. Chairman.
Mr. Arland. Mr. Chairman, I just want to make one point,
though, along those lines, and that is I am reminded of the
Dorito commercial. You know. ``Go ahead and crunch: we'll make
more.'' It is exactly the situation here. We will make as many
as we need to. And you are right. The more that we make, the
cheaper they are going to get.
Mr. Upton. Mr. Inslee.
Mr. Inslee. Sorry I was late to the meeting, but listening
to what you described as a dilemma in what to say to consumers
in this amorphous period, does that--does this whole situation
argue for an earlier hard date as opposed to a later one for
all concerned? That is a question to the whole panel, I guess.
Ms. DeSalles. Well, we would be concerned with an earlier
date, because of the need for an effective transition period
for public education. We believe that you need a minimum of a
year in order to get the materials ready, the PSA
announcements. I mentioned earlier that we felt there should be
a comprehensive outreach effort toward educating consumers, and
it would take a year to get the information prepared, ready,
and out, distributed via PSAs, articles, for example, AARP
magazine information or website information. It takes time to
educate.
If I may relate a personal experience about the need for
consumer education. As it happens just a month or so ago, I
purchased a large screen HDTV, and before I went out to buy
that television in looking at some of the ads, I thought,
``Well, good grief these televisions are awfully expensive,''
whereas here is a big screen set--I was looking for 34 inches,
and I thought, ``Here is one 32 inches that is only several
hundred dollars,'' you know, without really considering that
this was something that is going to be obsolete. So I have had
my old TV for 20 years, so I am not one of those that runs out
and purchases gadgets that often. And a little investigation
told me that what I really wanted was the quality of HDTV. So I
went to the store and thought, because I am a cable subscriber,
that I was buying something that I could hook into the cable
box and have high definition. Wrong. I still needed a box to
make that conversion. I am not an expert on technology, but
neither do I consider myself an uneducated person. I didn't
know and the salesman never explained to me what was required
with that purchase.
So I am saying that a lot of detailed information in an
easily readable form needs to be given to consumers. I have not
seen the tip sheet, but just from this end of the table looking
at it, I think it would be difficult for many, particularly
older people, to comprehend.
Mr. Roberts. If I may, and I agree with you. We referred to
the tip sheet. This is really the tip of the iceberg. I mean,
if there was a hard date set, we would unleash some of the
greatest power in this country in terms of educating the
consumer, and that is the retailers. We would unleash a
marketing educational program, but right now, we have nothing
to market--to educate with, other than, something that may
happen. And many retailers have tried that. But, you know, we
are marketers. We, ourselves, spend, you know, hundreds of
millions of dollars on marketing, and I guarantee you we find
that our responsibility to educate the consumer and target
various Latino community and seniors in particular, because
those are markets that we cater to. But, I think you--all of
our competitors, all of our retailers, you find an unbelievable
power unleashed in terms of the educational program. That is
what a hard date also would unleash.
Mr. Inslee. Sort of following up on Mr. Wynn's questions,
what percentage of people coming in to buy an analog TV today
know that there is some potential that in the fairly recent
future--or near future there could be a cessation of that
broadcast? What percentage? Any idea? Is there any objective
evidence on that?
Mr. Roberts. I don't, and I would be just guessing. I think
it is a confusing area, so I would say that the percentage of
people who really understand what is going on is small. We make
an attempt to explain that to folks. But again, we are at a
price point. It is company specific. If Best Buy or Circuit
City were up here, they may have some other response. We are a
price point that folks are looking for something within the $70
to $250 price range. And today, they can't buy a digital
alternative. They are only left with buying an analog
alternative.
Mr. Inslee. So shouldn't we be a little concerned that
maybe 70 or 80 percent of the people buying this product don't
know that in several years this could be useless as far as
broadcast situation, or at least without an upgrade?
Mr. Roberts. Well, it is not useless. Again, you know, you
can hook it up to cable or satellite----
Mr. Inslee. No, no, no. For broadcast-only purposes.
Mr. Roberts. For broadcast----
Mr. Inslee. 30 percent of the TVs in my State are
broadcast-only. That is it. That is all they have got. So I
mean, it is not an insignificant number of people.
Mr. Mirabal. I do have information about studies about
awareness. And A.C. Neilson's most recent efforts on this show
that less than 5 percent of the public is aware of the
transition.
Mr. Inslee. That there is any potential transition, you
mean?
Mr. Mirabal. That is correct. They are unaware, completely,
obviously, unaware when they go in to buy a TV.
Mr. Inslee. Those are mostly Congressional staffers then.
Mr. Mirabal. Mostly. And I should disclose that I do not
have an HDTV.
Mr. Inslee. Okay. Got you. Well, let me just suggest one
thing we should consider, though, and that is mandating all of
the celebrity criminal trials that are broadcast should be put
on analog and then have an early cessation date.
Mr. Upton. Yes.
Ms. Blackburn.
Ms. Blackburn. Thank you, Mr. Chairman. And thank you to
each and every one of you.
Mr. Roberts, I am over here hiding from you, you know.
Let us see. I have got a--I want to commend you for being
here and for talking with us. You know, I think it was 1993 was
the first year that I saw a demonstration on HDTV. And it was
fascinating. So you know, Mr. Mirabal, you just said you
don't--that you have studies that show that only 5 percent of
the American public is aware that there is a transition taking
place. I wish you would share those with us, because I think
that the percentage actually would be much higher. So I would
like to see the data----
Mr. Mirabal. Certainly.
Ms. Blackburn. [continuing] that you are drawing that from.
I think that many people are aware something is going to take
place. They are just not aware of the specifics.
And Mr. Roberts, very quickly, I am a retail marketer in my
real life. And I have run a marketing business for years
working with malls and shopping centers and retailers and have
done a good bit of work with properties that would carry your
stores. And I commend you all, as with most retailers, the
salespeople in our electronic stores seem to be very
knowledgeable. They are young. They are aggressive. They like
being able to make that sale and encourage people to, as
someone just said, up-sell. Do you have a list of best
practices ready to go that if you were given a hard date you
would take this list of best practices with your employees to
go through your employee training to deliver consumer awareness
and say, ``Here is point A to 10--1 to 10 on a sheet and begin
making consumers aware.'' Do you have point of purchase
information that you are going to put on appliances in your
store that will say, ``This unit is analog.''? ``This is high
definition.'' ``This is digital.'' ``This is the transition
date.'' Are you all equipped to turn that on a dime as soon as
you are given a hard date and are you prepared with CERC and
ARM and other groups in the retail industry to share that
information and develop a comprehensive program?
Mr. Roberts. Sure. In fact, I responded that we probably
need a year, and that is mainly in terms of production of the
converter box.
Ms. Blackburn. The information, the education.
Mr. Roberts. But the information, the educational program,
you know, with a hard date, we could mobilize----
Ms. Blackburn. How quickly?
Mr. Roberts. Within weeks.
Ms. Blackburn. Within weeks?
Mr. Roberts. Within weeks, we will have a program
developed----
Ms. Blackburn. Excellent.
Mr. Roberts. [continuing] in terms of training programs,
modulars, putting people through it. And we do this all of the
time.
Ms. Blackburn. Okay.
Mr. Roberts. This is, when new technologies come out or
there is a big consumer trend, we can do it within weeks.
Ms. Blackburn. Thank you. I--that is exactly the answer I
had expected to receive from you all.
Ms. DeSalles, I have just a couple of questions for you,
please, ma'am, if I could.
Ms. DeSalles. Sure.
Ms. Blackburn. You have talked about you feel like there--
that a comprehensive strategy is needed and that it will take a
year for you all to move through this with PSAs and articles
and the website and the magazine. You know, my husband is AARP
eligible, and I am 52, so I get mail from you, and neither one
of us belong to AARP, though. So you know, full disclosure
there, since the chairman was talking about being AARP
eligible. I went to your website, and in your search engine I
typed in these phrases: HDTV, digital television, DTV. Nothing
comes up.
Ms. DeSalles. No, I----
Ms. Blackburn. Nothing comes up. So--no, please, ma'am, let
me finish----
Ms. DeSalles. Yes.
Ms. Blackburn. [continuing] my question. So if to you it is
important that we participate, that we do a comprehensive
strategy, when do you all plan to begin putting information on
your website? You know that this is going to happen. You know
that it is something that we are going to be working toward.
You have just talked about going out and purchasing a TV that
had been replacing a TV that was 20 years old. So did that not
behoove you to begin thinking in terms of you bear some
responsibility to start talking with your members about this?
Ms. DeSalles. When I mentioned that we feel that it would
take a year to develop a comprehensive public education
program----
Ms. Blackburn. Why is there nothing there now?
Ms. DeSalles. I did not mean we at AARP. I had said earlier
in my testimony that we would be very willing to work with the
FCC or any other Federal agency to develop----
Ms. Blackburn. Do you feel like your members are aware that
this is taking place?
Ms. DeSalles. No, I do not.
Ms. Blackburn. You do not. And you all have chosen to not
address this with them.
Ms. DeSalles. It has not been put on our website so far.
Yes, you are right.
Ms. Blackburn. Okay. When do you plan to start addressing
it with them?
Ms. DeSalles. I can't give you a date.
Ms. Blackburn. So then you are not willing to participate?
Ms. DeSalles. That is--no, I am not saying that at all.
Ms. Blackburn. Okay.
Ms. DeSalles. We are more than willing to participate in
this effort.
Ms. Blackburn. Okay. Okay.
Ms. DeSalles. I am saying I can't give you----
Ms. Blackburn. Well, we know the technology is there. The
technology has been there for years, and the transition has
been talked about for about 10 years. So you know, I will
continue to check your website. My--I would hope that you all
would be working with us on this to help deliver the
information that is so incredibly necessary for this.
Mr. Thomson, quickly to finish up with you, and I am sure I
am running close to out of time, how quickly can you turn
around your manufacturing on the box? How quickly?
Mr. Arland. I think we could do it in about 8 weeks. We
have designed this product. We are ready to go, ready to pull
the trigger.
Ms. Blackburn. Within 8 weeks. Okay. I will ask to
interrupt you there. I am over time.
Thank you, Mr. Chairman.
Mr. Upton. Well, just before I yield to Mr. Terry for a
second question, the gentlelady makes a very good point, and I
just want to follow up with a quick question, and that is as we
look to get America using digital, I think it is very important
that a date be set. And because with the establishment of a
hard date, I mean, I look at members in this committee, I look
at consumers in stores across the country. Life is pretty busy.
And not until we know the date are we really going to get
America to focus on raising that number up from above the less
than 5 percent that was indicated earlier. So I would ask each
of you, just very quickly, do you concur with me that the hard
date will then set the process? You can send the orders to the
manufacturers to begin to build those boxes and ultimately get
the price considerably down from where it is today and America
will move forward as they enter the stores across the country
and figure out what they are going to do with their 30-year-old
sets let alone the sets that they have bought to watch the
Super Bowl this last Christmas. Do you agree with me, Mr.
Roberts?
Mr. Roberts. I absolutely agree with that.
Mr. Upton. Mr. Arland?
Mr. Arland. I agree.
Mr. Upton. Mr. Mirabal?
Mr. Mirabal. I agree a hard date is needed, si.
Mr. Upton. Mucho gusto.
Ms. DeSalles. Yes, since it would add to the education of
our members, we could support a firm date.
Mr. Upton. Okay.
Mr. Terry.
Mr. Terry. Thank you. I appreciate the time for a second
panel--Ms. DeSalles actually set up my next question,
unknowingly.
Ms. DeSalles. Oh, I am so sorry I did that.
Mr. Terry. No, no. Actually, it is a good question, so--or
a good set.
I have said that the best thing we can do for the consumers
is make this transition, or at least the product, as simple to
use, and you hit on one of my issues, and that is the plug-and-
play ready. Most consumers have had plug-and-play cable-ready
sets. You were very helpful with--in supporting our bill--my
bill requiring plug-and-play sets to be manufactured, and the
FCC then did what we had hoped they were going to do by rule
and regulation, in essence, taking most everything in our bill
and doing that. Since then, since I felt like I have a little
bit of ownership with the plug-and-play sets, whenever I am in
Nebraska Furniture Mart or Best Buy or--I don't think I have
seen one in RadioShack yet, I look for those. And what I find
is one or two plug-and-play or ready sets, and they are usually
several hundred dollars more than the next HDTV set of the
same.
So I have two questions. What do you feel--or do you have a
feel for the penetration yet of the plug-and-play, and are
there difficulties out there? Are the cable companies not
cooperating with the digital card that needs to be inserted in
there for it to make it plug-and-play? Why are we having a
difficult time getting the plug-and-plays out there for the
consumers so we can make it simple for them?
Mr. Roberts. Here comes another chart.
Mr. Arland. I have got another chart.
[Chart.]
Mr. Roberts. It is like Ross Perot.
Mr. Terry. Yes, I was thinking the same thing. The Ross
Perot of the consumer electronics.
Mr. Arland. For those that aren't familiar with the back of
high-end television that has--that is cable-ready--digital
cable-ready, this is called the cable card, and this slides
into the back of the TV. It is the security mechanism so that
the cable operator can sell high-definition and other high-
value content. And it is a new feature that started to be added
last August to television sets. So it doesn't surprise me,
Congressman, that you haven't seen much of it. The module
itself actually looks like this. The idea is to eliminate the
problem that you have had to bring home a cable-ready set and
get this little card from your cable operator and plug it in
and watch HDTV. And the issues have been one that the cable
operators don't make a whole lot of money on this particular
product. So they are more motivated to sell the consumer a set-
top box. We have had issues with these things not working
properly in certain markets. We have had issues with markets
like Chicago running out of cards from major operators, which
to me is unthinkable. And yet our industry, the consumer
electronics industry, has made an enormous investment of time.
The Congress is quite interested in this. The Commission set
standards. It is a top tier product that hopefully some day
will be in a smaller screen size that Len's stores might carry
as well. So believe it or not, the No. 1 thing that consumers
ask when they walk in to buy a new TV is, ``Is it cable-
ready?'' And--not, ``Is it high-definition?'' Not, ``Is it
analog?'' Whatever. That, you know, they are sort of trained to
that idea, because that goes back to analog cable back in the
1980's and before. So the industry is beginning to ship these
products. We have had some issues with not all of the cable
systems properly working and not being able to find the cards.
This morning, the Consumer Electronics Association announced
that 1 million said sets, digital cable-ready sets, had shipped
in 2004, and we are expecting that to triple this year to 3
million.
Mr. Terry. All right.
One of the discussions that we had with plug-and-play is
that the current plug-and-play are one-way----
Mr. Arland. Yes.
Mr. Terry. [continuing] and the next generation hopefully
will be two-way. Where are we in that process?
Mr. Arland. Those are difficult, long discussions. They
have been going on for over a year. It is sort of like the
peace conference because you have Hollywood on this side and
the TV makers and, you know, the cable operators, and the
satellite companies. These are difficult things to do. And it
has not gone as quickly as we had hoped. And frankly, one of
the issues is that we believe cable should be held to the same
standard for their own set-top boxes to use this removable card
so that they are as motivated as we are to make sure that it
works.
Mr. Terry. All right. One other question in my 22 seconds.
In Omaha I have an issue with what I can't go through in HD
hearing without mentioning this, it is expected of me now,
channel 3 withholds their HD signal from cable and saying just
get it over the air, and they--so I quit saying this at every
hearing. They said, ``We will come out and put one out on your
house so you can get our HD signal.'' And I said, ``How much
does that cost?'' They said, ``Don't worry about it. We will do
it for free.'' And I said, ``No, we have got rules. How much
does it cost?'' And he said, ``About $300.'' And I said, ``No,
then you can't come to my house and put on an antenna.'' Is
that a $300 antenna?
Mr. Arland. Actually----
Mr. Terry. Or on the windowsill over here?
Mr. Arland. [continuing] we will pull back the curtain, not
to be a Wizard of Oz on you here----
Mr. Terry. I remember this show.
Mr. Arland. This is an RCA antenna, $14.95.
Mr. Terry. Now this is the standard digital set. Is there a
difference then? Why would the manager of Gingham TV say it is
going to be a $250 or $300 antenna that is necessary when----
Mr. Arland. It depends.
Mr. Terry. [continuing] a $19 one works?
Mr. Arland. Well, it depends on where you live.
Mr. Terry. And I live about 30 miles away from the tower.
Mr. Arland. Okay. So if you are 30 miles away from the
transmitting tower, this is physics, you really should have an
outside antenna, and in which case it is a Yagi, one of those
big things from the 1950's mounted on your house. You know. I
have one in my attic, and I use it to pick up things that are
60 miles away, but I can also use one of these for things that
are closer. So it really is a function of where you are.
Mr. Terry. Okay.
Mr. Arland. And the Antennaweb.org website that I mentioned
earlier gives advice to consumers so when they go to RadioShack
or Circuit City or Best Buy or Wal-Mart, you know, they can
make an informed decision. And in some cases, yes, a large
antenna might be necessary, but I think this demonstrates
pretty easily that even in a steel encased building where I
couldn't even get outdoors, we can do it with a $15 antenna.
Mr. Terry. Thank you.
Mr. Upton. And again, the point would be if you already
have an antenna that works, you don't need to get a new
antenna.
Mr. Arland. Yes. Mr. Chairman, that brings up----
Mr. Upton. It is with the existing antenna.
Mr. Arland. That is a great point. And I have a friend in
Ellwood, Indiana who bought a house and Ellwood is a remote
part of the Hoosier State, maybe not as remote as Nebraska. I
am not sure.
Mr. Upton. It is pretty remote. I don't know. I have no
clue where it is.
Mr. Arland. Yes. It is south of South Bend.
Mr. Upton. I know where Omaha is.
Mr. Arland. So he has a house with an antenna that he has
never used. The previous owner had it. He wanted to go digital.
He brought home an HDTV monitor. He bought a set-top box from
me. I gave him a pretty good price. He is a friend of mine. And
he plugged it into that 25-year old antenna, and bingo, he can
pick up Indianapolis HDTV. I think he is 64 miles away from the
city. So you are right. If you have got an analog antenna----
Mr. Upton. That will reach across Lake Michigan then. Good.
Mr. Bass, do you have further questions?
Well, thank you. Thank you all for your testimony. It is
very important. We are going to be moving on this, and we
intend certainly--Mr.--I am sorry. Mr. Gonzalez, do you have
additional questions? I am sorry.
We intend to be moving and certainly on a bipartisan basis.
And you are helping us with the understanding of this very
complex issue. We are immensely grateful for that. So thank
you. God bless.
[Whereupon, at 3:56 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Thomson Inc.
Indianapolis, Indiana 46290
April 11, 2005
The Honorable Fred Upton
Chairman
Subcommittee on Telecommunications and the Internet
2183 Rayburn House Office Building
Washington, D.C. 20515
Dear Chairman Upton: I'm pleased to respond to your inquiry, on
behalf of Representative Stearns, for more information following my
testimony on March 10, 2005, before the Subcommittee on
Telecommunications and the Internet. My answers appear below your
numbered questions:
Question 1. How much of a financial investment in R&D was involved
in developing this SDTV product?
Answer: Beginning with the move to digital television in 1996,
Thomson and successor digital TV company TTE Corporation have invested
millions of dollars to develop, manufacture, and sell a wide range of
digital TV products designed to meet emerging demand for high-
definition TV goods. We anticipated the maturing of the digital TV
marketplace and began work more than two years ago to meet the
requirements of the Federal Communications Commission's tuner-decoder
mandate. Each successive generation of digital TV product benefits from
performance and cost improvements, which is a normal cycle in consumer
electronics. TTE Corporation, the developer and manufacturer of RCA
televisions since the middle of 2004, has embarked on a multi-year, $7
million initiative to drive affordable digital TV production. The 27-
inch and 32-inch SDTV product line is the first fruit of that
initiative, which was started as TTE's effort to comply with the tuner-
decoder mandate. The benefits of this investment, which involve
integration of a new chipset and reduced cost for components, will also
stretch beyond the SDTV product line into products capable of high-
definition display. We anticipate being able to afford more affordable
High-Definition TV products, as well, that utilize the same digital
module ``electronic heart'' that receives and decodes terrestrial
digital TV signals.
Question 2. Will this TV work in various geographical locations and
environments?
Answer: Yes, the new SDTV products are designed to receive and
decode terrestrially-broadcast signals that emanate from TV broadcast
transmission towers throughout the United States. Reception is, of
course, directly tied to a robust transmission from the local
broadcaster. Both are needed for effective reception, decoding, and
display of digital TV (unless the consumer is connected to a
multichannel video provider such as cable or satellite).
Question 3. Do you think that other consumer electronics
manufacturers will or should follow Thomson's lead and introduce
similar low-cost DTV products into the marketplace?
Answer: At least one other TV manufacturer has already publicly
announced a similar product range of Standard Definition Digital TV
products in slightly larger screen sizes than those announced by TTE
Corporation. We expect increasingly affordable digital reception
functionality to become commonplace in more screen sizes, particularly
as the effect of the tuner-decoder mandate reaches smaller screen
sizes.
Question 4. Do you envision a time when these DTV's will be as
affordable as analog sets are today? If so, when?
Answer: Analog television prices benefit from more than 50 years of
cost reductions. The very first widely available all-electronic color
TV cost the equivalent of $6,000 in today's money. Today, a color TV
with the same screen size can be purchased for less than $175. The same
``cost curve'' will come into play with digital TV as well, although
the electronics required for digital TV reception and audio and video
decoding are significantly more expensive than their analog
counterparts. The fall 2005 availability of an RCA 27-inch SDTV with
digital electronics for less than $300 is evidence that digital TV
products are making great strides in affordability.
Thank you again for the opportunity to present Thomson and TTE's
views on this important topic. If there is any additional information I
can provide to you, please do not hesitate to contact me.
Sincerely yours,
David H. Arland
cc: The Honorable Cliff Stearns
The Honorable Edward J. Markey
The Honorable Joe Barton
The Honorable John D. Dingell