Order Code RL31260
CRS Report for Congress
Received through the CRS Web
Digital Television:
An Overview
Updated March 10, 2005
Lennard G. Kruger
Specialist in Science and Technology
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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Digital Television: An Overview
Summary
Digital television (DTV) is a new television service representing the most
significant development in television technology since the advent of color television
in the 1950s. DTV can provide sharper pictures, a wider screen, CD-quality sound,
better color rendition, and other new services currently being developed. The
nationwide deployment of digital television is a complex and multifaceted enterprise.
A successful deployment requires: the development by content providers of
compelling digital programming; the delivery of digital signals to consumers by
broadcast television stations, as well as cable and satellite television systems; and the
widespread purchase and adoption by consumers of digital television equipment.
Congress and the Federal Communications Commission (FCC) have set a target
date of December 31, 2006 for broadcasters to cease broadcasting their analog signals
and return their existing analog television spectrum to be auctioned for commercial
services (such as broadband) or used for public safety communications. However,
the Balanced Budget Act of 1997 (P.L. 105-33) allows a station to delay the return
of its analog spectrum if 15% or more of the television households in its market do
not subscribe to a multi-channel digital service and do not have digital television sets
or converters. Given the slower-than-expected pace that digital televisions have been
introduced into American homes, few observers believe that the goal of digital
televisions in 85% of American homes by 2006 will be reached, with the result that
television stations will continue to broadcast both analog and digital signals past the
2006 deadline. The key issue for Congress and the FCC is: what steps, if any, should
be taken by government to further facilitate a timely, efficient, and equitable
transition to digital television?
The 109th Congress is debating whether and how a “hard date” for the digital
television transition should be implemented, thereby freeing reclaimed analog
spectrum. Key policy questions include should the existing statutory digital
transition deadline of December 31, 2006 be implemented by modifying or removing
the 85% digital penetration threshold requirement, or would a later and redefined
transition deadline be more appropriate? Should the reclaiming of analog spectrum
for public safety uses be singularly designated, or should it be included as part of a
comprehensive approach to returning all of the analog spectrum? Paramount in this
debate is the issue of addressing the millions of American over-the-air households
whose existing analog televisions will require converter boxes in order to receive
digital signals, if and when the analog signal is turned off.
This report will be updated as events warrant.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What Is Digital Television? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Role of Congress and the FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Status of the DTV Buildout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Creation of Digital Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Delivery of Digital Signals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consumer Purchase of DTV Products . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reclaiming the Analog TV Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . 10
Digital “Must Carry” Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mandating Digital Tuners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Copyright Protection Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Cable/DTV Interoperability Standards . . . . . . . . . . . . . . . . . . . . . . . . 18
Digital Conversion of Public Broadcasting Stations . . . . . . . . . . . . . . 21
Satellite Television and “Digital White Areas” . . . . . . . . . . . . . . . . . . 23
Low Power TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Fees for Ancillary or Supplemental Services . . . . . . . . . . . . . . . . . . . . 25
Public Interest Obligations of DTV Broadcasters . . . . . . . . . . . . . . . . 26
Tower Siting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Activities in the 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Activities in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Appendix — Legislation in the 108th Congresses Related to
Digital Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
List of Tables
Table 1. Digital Conversion Schedule for Television Stations . . . . . . . . . . . . . . . 4

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Digital Television: An Overview
Most Recent Developments
The Intelligence Reform and Terrorism Prevention Act of 2004 (P.L. 108-458)
was signed into law on December 17, 2004. Section 7501 states that it is the sense
of Congress that “Congress must act to pass legislation in the first session of the 109th
Congress that establishes a comprehensive approach to the timely return of analog
broadcast spectrum as early as December 31, 2006” and that any delay in the
adoption of such legislation will “delay the ability of public safety entities to begin
planning to use this needed spectrum.”
On February 17, 2005, the House Energy and
Commerce Committee, Subcommittee on Telecommunications and the Internet held
the first of a series of hearings on the digital transition. The February 17th hearing
was entitled, “The Role of Technology in Achieving a Hard Deadline for the DTV
Transition.” A second hearing, entitled, “Preparing Consumers for the End of the
Digital Transition,” was held on March 10, 2005.
Congressional policymakers (particularly Representatives Barton and Upton of
the House Energy and Commerce Committee) have stated that there will be a DTV
bill introduced during the first session of the 109th Congress. Such a bill would
address the December 31, 2006 deadline for reclaiming the analog spectrum. Some
observers have speculated that a DTV bill may include additional DTV-related
provisions.
What Is Digital Television?
Digital television (DTV) is a new television service representing the most
significant development in television technology since the advent of color television
in the 1950s. DTV can provide sharper pictures, a wider screen, CD-quality sound,
better color rendition, multiple video programming or a single program of high
definition television (HDTV), and other new services currently being developed.
DTV can be HDTV, or the simultaneous transmission of multiple programs of
standard definition television (SDTV), which is a lesser quality picture than HDTV
but significantly better than today’s television. Or, alternately, DTV could deliver
as part of a multiple offering, some other service such as the distribution of text or
data (for example, electronic newspapers or stock quotes) or even a high speed
connection to the Internet.
The rationale often cited for the digital transition is that aside from offering
superior broadcast quality to consumers, DTV will allow over-the-air broadcasters
to offer the same kinds of digitally-based services (such as pay-per-view or high-
speed Internet) currently offered by cable and satellite television providers.
Additionally, it is argued that digital television uses the radiofrequency spectrum
more efficiently than traditional analog television, thereby conserving a scarce
resource (bandwidth) that can be used for other wireless applications.

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CRS-2
There are three major components of DTV service that must be present in order
for consumers to enjoy a fully realized “high definition” television viewing
experience. First, digital programming must be available. Digital programming is
content produced with digital cameras and other digital production equipment. Such
equipment is distinct from what is currently used to produce conventional analog
programming. Second, digital programming must be delivered to the consumer via
a digital signal. Digital signals can be broadcast over the airwaves (requiring new
transmission towers or DTV antennas on existing towers), transmitted by cable or
satellite television technology, or delivered by a prerecorded source such as a digital
video disc (DVD).1 And third, consumers must have a digital television product
capable of receiving the digital signal and displaying digital programming on their
television screens. To receive digital broadcast signals, consumers can buy digital
monitors accompanied with a set-top converter box (a digital tuner),2 or alternatively,
an integrated digital television with digital tuning capability already built in.
Role of Congress and the FCC
Congress and the Federal Communications Commission (FCC) have played
major roles in the development of DTV. Starting in 1987, the FCC launched a
decade-long series of proceedings exploring the potential and feasibility of a
transition from conventional analog televisions to advanced television systems.
While the original term used to describe the new television system was high
definition television (HDTV), the FCC used a broader term — advanced television
(ATV) — referring to any television technology that provides improved audio and
video quality. After it became clear that ATV would be using digital signal
transmission, the FCC began (in 1995) to use the term DTV (synonymous with ATV)
to describe the new service more accurately.
In December 1996, after lengthy debate between television manufacturers,
broadcasters, and computer firms, the FCC adopted a standard for DTV signal
transmission based on recommendations of the Advanced Television System
Committee (ATSC).3 The ATSC standard allows for 18 different video formats, of
which four have subsequently been adopted for commercial use.4
1 At present, commercially available DVD technology does not deliver digital high
definition programming.
2 Set-top converter boxes can also be used to enable conventional analog televisions to
receive digital signals over the air. However, analog televisions hooked up to digital tuners
cannot display high definition pictures.
3 FCC Fourth Report and Order In the Matter of Advanced Television Systems and Their
Impact on Existing Television Service, MM Docket No. 87-268, FCC 96-493, released
December 27, 1996.
4 Four video formats are being used commercially by U.S. television producers and
manufacturers. These four formats are described by the number of lines they produce per
each picture frame, and whether they use interlaced (i) or progressive (p) scanning
techniques. These are: 480i and 480p (suitable for SDTV broadcasts), and 720p and 1080i
(HDTV). The progressive scan video format is more compatible with PC displays, while
the interlaced scan is more compatible with analog television receivers.

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CRS-3
Meanwhile, the Telecommunications Act of 1996 (P.L. 104-104) provided that
initial eligibility for any DTV licenses issued by the FCC should be limited to
existing broadcasters. Broadcasters would be issued DTV licenses while at the same
time retaining their existing analog licenses during the transition from analog to
digital television. The act provided that broadcasters must eventually return either
their existing analog channel or the new digital channel. Also in the 104th Congress,
a major debate took place over whether to direct the FCC to conduct auctions for the
spectrum allocated for DTV. The FCC estimated the commercial value of the DTV
spectrum to be between $11 billion to $70 billion. No legislation was enacted,
however, and the FCC did not obtain the authority to auction the DTV licenses.
In 1997, the FCC adopted rules5 to implement the Telecommunications Act, and
granted DTV licenses to some 1600 full power incumbent television broadcasters.6
The DTV licenses consist of 6 megahertz (MHz) of unused spectrum within the VHF
and UHF frequency bands. Because DTV signals cannot be received through the
existing analog television broadcasting system (known as NTSC7) the FCC decided
to phase in DTV over a period of years, so that consumers would not have to
immediately purchase new digital television sets or converters. Thus, broadcasters
were given 6 MHz of new spectrum for digital signals, while retaining their existing
6 MHz for analog transmission so that they can simultaneously transmit NTSC and
DTV signals to their broadcasting market areas.8 The simultaneous broadcasting
(“simulcasting”) of the same programs in both digital and analog modes was intended
to allow viewers who have not yet purchased DTV sets or converters to continue to
receive television programming during the transition to DTV.
5 FCC Fifth Report and Order In the Matter of Advanced Television Systems and Their
Impact on Existing Television Service, MM Docket No. 87-268, FCC 97-116, released April
21, 1997.
6 A provision in the Public Health Security and Bioterrorism Preparedness and Response Act
of 2002 (P.L. 107-188, H.R. 3448, H.Rept. 107-481) addresses the digital conversion of full
power television stations that received their analog licenses after the FCC allocated digital
spectrum to existing analog stations in 1997. Section 531 requires the FCC to allot a digital
channel to any requesting full-power television station that had an application pending for
an analog television station construction permit as of October 24, 1991, and which had its
application granted after April 3, 1997. Any station receiving digital spectrum under this
provision is required to complete construction of its digital facility within 18 months,
without the possibility of an extension. Stations are also prohibited from operating an
analog signal on its designated digital channel. The bill’s conference report states that this
provision will allow recent broadcast licensees to foster a digital audience during the
transition period to digital television without having to terminate analog service, and that
without this change, those stations would be denied the flexibility to operate an analog and
a digital facility simultaneously in the near term, especially in major markets.
7 The National Television Systems Committee (NTSC) was the industry group that
developed the currently used U.S. television standards. For a discussion of the difference
between analog and digital signals, see CRS Report 96-401, Telecommunications Signal
Transmission: Analog vs. Digital.
8 Using digital technology, the DTV frequencies can be placed in the vacant portion of the
same spectrum band currently allocated for analog (NTSC) television without interfering
with analog television broadcasts.

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CRS-4
The ruling required television stations receiving the DTV licenses to build their
DTV facilities according to a schedule determined by the size of their markets. Table
1 shows the time line established by the FCC for DTV conversion. The FCC has
granted extensions to licensees unable to meet the schedule due to unforeseeable or
uncontrollable circumstances, such as an inability to secure tower locations for new
antennas.
Table 1. Digital Conversion Schedule for Television Stations
Stations
Conversion Deadline
affiliates of the four major networks in
May 1, 1999
the top 10 markets.9
affiliates in markets 11-30
November 1, 1999
rest of all commercial television stations
May 1, 2002
in the smaller markets
noncommercial television stations
May 1, 2003
The FCC set a target date of 2006 for broadcasters to cease broadcasting the
analog signal and return their existing analog television spectrum licenses to be
auctioned for other commercial purposes. During the 105th Congress, the Balanced
Budget Act of 1997 (P.L. 105-33) made the 2006 reversion date statutory, providing
that a “broadcast license that authorizes analog television service may not be renewed
to authorize such service for a period that extends beyond December 31, 2006.”
However, the act requires the FCC to grant extensions for reclaiming the analog
television licenses in the year 2006 from stations in television markets where any one
of the following three conditions exist:
! if one or more of the television stations affiliated with the four
national networks are not broadcasting a digital television signal;
! if digital-to-analog converter technology is not generally available
in the market of the licensee; or
! if at least 15% of the television households in the market served by
the station do not subscribe to a digital “multi-channel video
programming distributor” (including cable or satellite services) and
do not have digital TV sets or converters.
The FCC continues to monitor the status of the DTV conversion of both
commercial and noncommercial broadcast stations. On October 11, 2001, FCC
Chairman Michael Powell announced the creation of an FCC Digital Television
(DTV) Task Force to review the ongoing transition to DTV, and to make
recommendations on how to facilitate the transition and promote the rapid recovery
of broadcast spectrum for other uses.
9 The top ten television markets (in terms of advertising revenue), in order, are New York,
Los Angeles, Chicago, Philadelphia, San Francisco-Oakland, Boston, Dallas-Fort Worth,
Washington DC, Atlanta, and Detroit.

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CRS-5
The FCC is issuing periodic progress reports on the DTV buildout,10 and has the
option of granting deadline extensions to broadcasters. On November 8, 2001, the
FCC announced it would modify a number of its DTV transition rules, in order to
facilitate and speed the DTV transition. The changes permit stations to initially build
lower-powered (and less expensive) DTV facilities, while retaining their option to
expand their coverage area as the digital transition progresses. Meanwhile, the FCC
declined to issue a blanket extension of remaining DTV construction deadlines.
However, the FCC will consider, in limited circumstances, individual requests for
extensions due to financial hardship. Specifically:
Stations seeking an extension of time to construct DTV facilities on this basis
must provide detailed evidence that the cost of meeting the minimum buildout
requirements exceeds the station’s financial resources . . . a brief downturn in the
economy or advertising revenues will not be considered a sufficient showing of
financial hardship. Rather, the showing must reflect the particular station’s
financial status over an economically significant period of time. In addition, the
applicant must provide detailed evidence of its good faith efforts to met the
deadline, including its efforts to obtain the necessary financing.11
Approximately three-quarters of the 1,240 full-power commercial stations in the
United States did not meet the May 1, 2002 conversion deadline.12 Most have
received six-month deadline extensions from the FCC. On May 16, 2002, the FCC
adopted a Notice of Proposed Rulemaking (NPRM) which proposes increasingly
severe sanctions every six months on stations who have not constructed digital
facilities and do not demonstrate that their failure to do so was either unforeseeable,
beyond their control, or due to legitimate financial hardship. Sanctions progress from
admonishment, to issuance of a notice of apparent liability for forfeiture, to rescission
of the station’s DTV license.13

On April 4, 2002, FCC Chairman Michael Powell submitted, to the Chairmen
of the House Energy and Commerce Committee and the Senate Commerce, Science,
and Transportation, a proposal for voluntary industry actions to speed the digital
television transition. The proposal, which is purely voluntary, is intended (in
Commissioner Powell’s words) “to provide an immediate spur to the transition by
giving consumers a reason to invest in digital technology today, while we continue
to work on resolving the longer-term issues.”14
On August 8, 2002, the FCC announced actions intended to further encourage
the roll-out of DTVs by the December 31, 2006 target completion date. Specifically,
10 The most recent progress report is contained in: Second Report and Order and Second
Memorandum and Order, MM Docket No. 00-39, August 9, 2002, FCC 02-230, 41 p.
11 FCC News Release, “FCC Acts to Expedite DTV Transition and Clarify DTV Buildout
Rules, November 8, 2001.
12 See General Accounting Office, Telecommunications: Many Broadcasters Will Not Meet
May 2002 Digital Television Deadline, GAO-02-466, April 2002.
13 See [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-222561A4.pdf].
14 For proposal and cover letters to committees, see:
[http://www.fcc.gov/commissioners/powell/mkp_proposal_to_speed_dtv_transition.pdf].

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CRS-6
the FCC adopted a Second Report and Order and Second Memorandum Opinion and
Order (FCC 02-230) which requires television receivers and receiving equipment
(such as VCRs and DVD players/recorders) to include DTV reception capability (see
section in this report, “Mandating Digital Tuners” for further details).
On September 10, 2003, the FCC adopted a Second Report and Order which
adopts, with certain modifications, an agreement between the cable and consumer
electronics industries ensuring the compatibility between cable systems and
commercial electronics devices (see section in this report, “Cable/DTV
Interoperability Standards.”
On November 4, 2003, the FCC adopted a Report and Order and Further Notice
of Proposed Rulemaking (FCC 03-273) which gives broadcasters the option of
inserting a “broadcast flag” into their over-the-air broadcast transmissions (see
section in this report, “Copyright Protection Technology” for further information).
On January 27, 2003, the FCC initiated its Second Periodic Review of the DTV
transition. The Notice of Proposed Rulemaking (FCC 03-8) seeks comment on a
number of issues related to the DTV conversion.15 Included in the NPRM is the issue
of how the FCC will determine whether 85% of American households have access
to digital signals by 2006. The NPRM also reopens the issue of public interest
obligations of DTV broadcasters.
On August 4, 2004, the FCC adopted a Report and Order (FCC-04-192) which
implements several steps identified in the Second Periodic Review. These include
commencing an open channel election process, establishing deadlines for
broadcasters to increase power, and resolving outstanding operational issues.16
On October 4, 2004, the FCC announced a DTV consumer education initiative.
The FCC announced a new website — [http://www.dtv.gov] — which is intended as
a comprehensive source of information for consumers on the DTV transition.
Status of the DTV Buildout
The nationwide buildout of digital television is a complex and multifaceted
enterprise. A successful buildout requires: the development by content providers of
compelling digital programming; the delivery of digital signals to consumers by
broadcast television stations, as well as cable and satellite television systems; and the
widespread purchase and adoption by consumers of digital television equipment.

Creation of Digital Programming. Digital programming is created with
digital cameras and other digital production equipment. Digital content tends to favor
more “visual” types of programming — such as sports events or movies — which
15 See Notice of Proposed Rulemaking, Second Periodic Review of the Commission’s Rules
and Policies Affecting the Conversion to Digital Television, MB Docket No. 03-15, FCC
03-8, Jan. 27, 2003.
16 FCC News Release, “FCC Takes Next Steps to Promote Digital TV Transition,” August
4, 2004.

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CRS-7
take full advantage of the high-definition viewing experience. Currently, the amount
of available digital programming is limited, but gradually becoming more
widespread. Among broadcast networks, CBS produces the largest amount, with
digital high-definition broadcasts available in all of its prime time scripted
entertainment series, as well as many of its national sports broadcasts. ABC is
offering HDTV broadcasts in nearly all of its prime time schedule and in some of its
sports broadcasts. PBS has also been active, producing digital programming as well
as offering multicasts over digital channels in some local markets. NBC and FOX are
offering digital programming as well (although not necessarily in high definition),
and FOX plans to transmit at least 50% of its prime time schedule in HDTV by the
2004-2005 season. Cable networks producing (or planning to produce) digital
programming include HBO, Showtime, A&E, Discovery, ESPN, Bravo, Cinemax,
HDNet, In Demand, and Madison Square Garden.17
Two factors generally inhibit content providers from accelerating the production
of digital programming. First, because relatively few households have digital
televisions, networks have a diminished incentive to invest the money to produce
digital content. Some digital programming is being produced by networks in
sponsorship/partnership with consumer electronics companies who manufacture
digital televisions. Second, content providers (e.g. networks and movie studios) are
reluctant to provide digital programming until a digital copyright standard is in place
(see discussion below, under “Issues”).


Delivery of Digital Signals. Currently, there are three ways digital
programming is being delivered to consumers. Digital signals are: 1) broadcast over
the airwaves; 2) transmitted over channels provided by satellite television systems;
and 3) provided via digital cable service in a growing number of markets.

Broadcasting. According to the National Association of Broadcasters (NAB),
as of March 10, 2005, there were 1,373 stations (both commercial and public)
broadcasting digital signals in 211 markets.18 This represents about 86% of the
nation’s approximately 1,600 television stations. The 211 markets currently
receiving digital transmissions cover over 99% of U.S. TV households. Television
stations must construct new facilities and purchase new equipment in order to
transmit digital signals. According to NAB, costs range from $8-10 million to fully
convert a station to digital operation.19 NAB estimates that the total cost of the
transition for broadcasters is $10 to $16 billion.20
17 Cable & Telecommunications Overview, 2001, June 2001, National Cable Television
Association.
18 For latest statistics, see [http://www.nab.org/newsroom/issues/digitaltv/dtvstations.asp].
19 Testimony of Ben Tucker, Chairman of NAB Television Board, in: U.S. Congress,
House, “Digital Television: A Private Sector Perspective on the Transition,” Hearing Before
the Committee on Energy and Commerce, Subcommittee on Telecommunications and the
Internet, March 15, 2001, 107th Cong., 1st Sess., p. 72.
20 Testimony of Edward O. Fritts, NAB President and Chief Executive Officer, before the
House Committee on Energy and Commerce, Subcommittee on Telecommunications and
(continued...)

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CRS-8
As of March 7, 2005, the FCC has granted a construction permit or license to
1,680 stations, about 97.6% of the total number of DTV allotments.21 Approximately
three-quarters of the 1,240 full-power commercial stations did not meet the May 1,
2002 conversion deadline. A total of 843 commercial stations requested from the
FCC an extension of the May 2002 deadline in order to complete construction of
their DTV facilities. So far, 772 have been granted and 71 have been admonished.
Of those stations granted extensions, 602 filed requests for second extensions. Of
this number, 535 extension requests have been granted, 67 have been dismissed, and
the rest remain pending. A third extension was requested by 141 stations; 104
extensions were granted, action was deferred for 30 satellite stations, and 7 stations
were admonished. Meanwhile, 214 noncommercial educational stations requested
extension of the May 1, 2003 buildout deadline. The FCC has granted all of those
extension requests; 134 stations filed for second extensions with 129 granted.22
Satellite. Satellite television is currently provided to over 22 million American
households. Two major companies offer direct broadcast satellite (DBS) television
service in the United States: Echostar’s DISH Network and Hughes’ DirecTV.
Hughes and Echostar offer eight and nine high definition channels, respectively.
Neither service offers local high definition broadcast channels in most markets.
Another company, Rainbow DBS (a subsidiary of Cablevision), offers thirty-nine
high definition channels through a service called Voom.23 Satellite TV customers
need added equipment (a slightly bigger satellite dish and either a set-top box or
built-in satellite HDTV reception capability) in order to receive high-definition
programming on their digital televisions.
Cable. Initially, cable companies had been reluctant to carry channels of digital
and high definition programming (thereby displacing some existing channel
offerings) until more consumers have the digital television equipment necessary to
view digital programming (see discussion of “must carry” below).24 Also there are
copyright, standards, and interoperability issues between the cable system and DTV
sets that must be resolved (see “copyright and standards” below).
20 (...continued)
the Internet, June 2, 2004.
21 See [http://www.fcc.gov/mb/video/files/dtvsum.html].
22 Ibid.
23 Testimony of Richard DalBello, President, Satellite Broadcasting & Communications
Association, hearing before the Committee on Energy and Commerce, Subcommittee on
Telecommunications and the Internet, June 2, 2004.
24 Many cable (and both DBS commercial services) are “digital.” However, “digital
cable”generally refers to technology which converts analog programming to a digital signal
which is transmitted to the consumer and then converted back to analog form for television
viewing. “Digital cable” allows cable companies to provide more channels, as well as high
speed (broadband) Internet service. However, the “digital” signals transmitted over cable
systems use different digital standards than the DTV standard used by broadcasters and
current DTV sets; therefore current digital cable services currently cannot be directly
received by DTV sets.

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CRS-9
The reluctance of cable companies to carry digital programming has changed,
however, as cable providers in several markets have begun to implement plans to
carry digital or high-definition channels. On May 1, 2002, the nation’s top ten cable
companies pledged to implement FCC Chairman Powell’s voluntary plan, which
calls on cable operators to carry digital signals of up to five broadcast or other digital
programming services by January 1, 2003.25 According to the National Cable &
Telecommunications Association (NCTA), as of September 2004, consumers in 177
(out of 210) local TV markets can now receive a package of HDTV services from
their cable operator. Cable systems providing HDTV pass 90 million U.S. television
households (out of a total 108 million) and reach all 100 of the biggest TV markets.26

Consumer Purchase of DTV Products. DTV products are now available
from several manufacturers that offer varying features and technical characteristics.
Currently, most consumers who purchase DTV products are purchasing digital
television monitors, available at prices ranging from about $500 to $1,000, depending
on screen size and other features. Digital monitors are primarily being used by
consumers to watch DVDs,27 regular analog television, and digital programming over
a cable or satellite television system. A digital monitor must be coupled with a set-
top digital receiver or tuner (costing in the range of $300 to $500) in order to receive
digital broadcast signals.28 An integrated DTV, which contains a built-in digital
tuner, is sold at prices ranging from about $1,000 to $10,000. Over the past several
years, prices for DTV monitors and receivers have dropped markedly. As the market
for DTVs expands, prices are expected to decrease further.29
According to the Consumer Electronics Association (CEA), DTV shipments
(from suppliers to retail outlets) totaled 7.3 million units in 2004, a 63% increase
over 2003. The total number of DTV products sold since 1998 stands at 11.7
million. Additionally, approximately 1.2 million over-the-air digital television tuners
25 McConnell, Bill, “Cable Takes the High-Def High Road,” Broadcasting & Cable, May
6, 2002, pp. 54-60.
26 National Cable & Telecommunications Association, “Consumers in 177 Markets Across
the U.S. — Including all of the Top 100 — Can Now Receive HDTV Over Cable,” Press
Release, September 27, 2004.
27 Commercially available DVD technology does not yet support digital programming.
However, current DVDs viewed over a DTV provide a significantly higher quality picture
than DVDs viewed over regular analog televisions.
28 Many consumers are asking whether their current analog TV sets will become obsolete
with the advent of DTV. Consumers can continue to use analog TV sets until the
broadcasters return the analog TV licenses to the FCC, after which, a set-top digital
converter box could be used to enable the analog TV set to receive the DTV signal. Digital
converters, however, will only enable the display of pictures comparable in quality to
existing sets. They will not provide HDTV-quality images, or other new services that may
come with DTV.
29 Testimony of David Arlin, Thomson Multimedia Inc. on behalf of the Consumer
Electronics Association, in: U.S. Congress, House, “Digital Television: A Private Sector
Perspective on the Transition,” Hearing Before the Committee on Energy and Commerce,
Subcommittee on Telecommunications and the Internet, March 15, 2001, 107th Cong., 1st
Sess., p. 47.

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CRS-10
(either stand-alone set-top boxes or integrated within the DTV set) have been sold,
factory to dealer, since 1998.30 While growth has occurred, the penetration of DTVs
into the American home remains relatively small, with approximately 12% of the 110
million American households having DTVs, and about 1% having the ability to
receive digital over-the-air signals.
Policy Issues
While the nation’s transition to digital television is proceeding, industry analysts
believe that widespread adoption of DTVs by consumers will not be achieved by
2006, and that — under current law — television stations will continue to broadcast
both analog and digital signals past the 2006 deadline. The key issue for Congress
and the FCC is: what steps, if any, should be taken by government to further
facilitate a timely, efficient, and equitable transition to digital television? To address
this question, Congress and the FCC must confront a highly complex policy
landscape, involving different industries, technologies, and interests, including
content providers, commercial and noncommercial television broadcasters, cable and
satellite television providers, consumer electronics manufacturers and retailers, and
consumers.
Currently the three critical components of the digital transition — programming
and content, delivery of a digital signal, and consumer purchase of DTVs — appear
to be lagging and hindered by what many describe as a “chicken or egg” dynamic.
Most consumers are reluctant to buy DTVs until there is more high quality digital
programming to watch. Content providers have a diminished incentive to create
digital programming until a larger number of consumers are capable of receiving
digital television service. And television service providers (especially cable and
satellite) have little incentive to provide digital programming until more consumers
have DTVs and content providers supply more digital programming.
Broadcasters are currently under a statutory mandate to convert, with the
expectation that the presence of digital broadcast signals will provide sufficient
market incentives for other stakeholders to go digital. Much of the policy debate
revolves around the question of whether this strategy will yield a timely, efficient,
and equitable digital transition. The following discusses a number of specific policy
issues related to the transition to digital television.
Reclaiming the Analog TV Spectrum. The goal of the FCC and Congress
has always been to complete the transition to DTV as quickly as possible, so that
NTSC (analog) spectrum can be reclaimed and reallocated for other purposes. Some
of the NTSC spectrum will be auctioned for commercial wireless services, and some
of it will be used for new public safety services (the FCC has already designated
some of the analog TV spectrum for public safety use).31
30 Consumer Electronics Association, Press Release, “CEA Reports Consumer Electronics
Sales Jump 11 Percent in 2004,” January 5, 2005, available at
[http://www.ce.org/press_Room/press_release_detail.asp?id=10650]
31 See CRS Report RL32622, “Public Safety, Interoperability, and the Transition to Digital
(continued...)

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CRS-11
The current target date for broadcasters to return analog spectrum is December
31, 2006. However, the Balanced Budget Act of 1997 allows a station to delay the
return of the analog spectrum if 15% or more of the television households in its
market do not subscribe to a multi-channel digital service and do not have digital
television sets or converters. Given the slower-than-expected pace that digital
televisions have been introduced into American homes, few, if any, observers believe
that the goal of digital televisions in 85% of American homes by 2006 will be
reached.32 Thus, some observers are concerned that if digital television does not
sufficiently penetrate American homes in the near future, the analog spectrum will
not be reclaimed, and broadcasters will keep both analog and digital television
spectrum licenses indefinitely, thereby preventing spectrum from being available for
commercial wireless services and public safety applications (for example, police and
firefighter radio communications).
Some have urged Congress to require broadcasters to return the analog spectrum
on “a date certain.” Under this approach, spectrum would be freed up for other uses.
Among legislation in the 108th Congress, the HERO Act (H.R. 1425 and within 9/11
Commission omnibus bills H.R. 5024, H.R. 5040, and S. 2774) would have
prohibited any delay in reassigning the 24 MHz for public safety purposes, and would
have required those frequencies to be operational by January 1, 2007. The Spectrum
Commons and Digital Dividends Act of 2003 (H.R. 1396) requires the FCC to ensure
that any rules necessary to effectuate the timely transition to digital television are
promulgated and completed prior to making available 700 MHz bands to commercial
wireless services.
At the request of Representative Edward Markey, Ranking Minority Member
of the House Subcommittee on Telecommunications and the Internet, the General
Accounting Office (GAO) prepared a report on the digital transition entitled,
Additional Federal Efforts Could Help Advance Digital Television Transition.
Released in November 2002, the GAO report found that few consumers own digital
television equipment, that many consumers are unaware of the DTV transition, and
that cable and satellite carriage of DTV signals is limited. Concluding that it is
unlikely that 85% of households will be able to receive DTV signals by December
2006, GAO recommended that the FCC: explore options to raise public awareness
about the DTV transition; examine the costs and benefits of mandating that all new
televisions be digital cable-ready; and examine the advantages and disadvantages of
setting a fixed date for transferring must-carry rights from broadcasters’ analog
signals to digital signals.33
31 (...continued)
Television,” by Linda K. Moore.
32 Historically , consumer electronics products take many years to be adopted. Since its
introduction in 1953, color television took roughly 25 years to enter 85% of American
homes. The video cassette recorder (VCR) took 15 years to reach 85% of homes.
33 General Accounting Office, Additional Federal Efforts Could Help Advance Digital
Television Transition, GAO-03-7, November 2002, 52 p. Available at [http://www.gao.gov/
new.items/d037.pdf].

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CRS-12
During March and April 2004, another digital transition proposal was informally
circulated by the Media Bureau of the FCC.34 Under this proposal, the transition
deadline would be moved from 2006 to 2009. Cable and satellite providers would
be required to carry a broadcaster’s digital signal only, but could — if the broadcaster
so chooses — down-convert the digital signal to an analog signal that cable or
satellite customers could watch on their analog televisions. Under this scenario,
according to the Media Bureau proposal, cable and satellite TV households watching
down-converted digital signals on their analog sets would be counted toward the 85%
statutory threshold required in order for broadcasters to return to the government their
valuable analog spectrum, which can then be auctioned and/or assigned for other
purposes. Given that cable and satellite television households currently comprise
88% of all television households, it is likely that the 85% threshold would be
satisfied in most areas. Subsequently, analog spectrum would be reclaimed and
analog television sets would no longer be able to receive over-the-air television
broadcasts unless they are equipped with a converter box.
The broadcasting industry has expressed strong opposition to the Media
Bureau’s proposal.35 According to the broadcasters, the proposal would discourage
the development of digital television services (such as HDTV and multicasting) and
remove the incentive for consumers to purchase DTVs. Additionally, they argue, if
analog spectrum is reclaimed under the Media Bureau proposal, the 12% of TV
households that are exclusively “over-the-air” — many of whom are economically
disadvantaged — would lose their television service altogether unless they purchased
DTVs, converter boxes, or cable or satellite television subscriptions. In response to
these criticisms, Kenneth Ferree, former head of the Media Bureau, argued that the
development of digital services will not be adversely impacted because market forces
will ensure that popular stations will likely be carried by cable and satellite TV
providers in both digital and analog form by 2009. Additionally, suggested Ferree,
economically disadvantaged over-the-air households could receive federal subsidies
(derived from reclaimed spectrum auction proceeds, for example) for purchasing
converter boxes, thereby ensuring that these households will continue to receive
television service.36
On May 27, 2004 the FCC Media Bureau invited comments from the public on
the issue of how to minimize the disruption to consumers when the switch-over to
digital broadcasting occurs.37 Specifically, the FCC sought comments on whether
market forces or private sector measures were adequate to address consumer
disruption, or whether government action (such as converter box subsidies, for
example) may be necessary.
34 The Media Bureau’s digital transition proposal has not yet been released as a formal
document.
35 Written Ex Parte Submission in MB Docket Nos. 03-15 & 98-120, April 15, 2004,
Available at
[http://www.nab.org/Newsroom/PressRel/Filings/LetterReFerreePlan041504.pdf].
36 Boliek, Brooks, “Feds: No analog TV by ‘09,” Hollywood Reporter, April 15, 2004.
37 FCC Public Notice, “Media Bureau Seeks Comment on Over-the-Air Broadcast
Television Viewers,” MB Docket No. 04-210.

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CRS-13
During the 108th and 109th Congresses, congressional policymakers have
grappled with the issue of reclaiming the analog spectrum. For further details, please
see sections entitled, “Activities in the 108th Congress” and “Activities in the 109th
Congress” in this report.

Digital “Must Carry” Debate. Under the “must carry” provisions of the
Cable Television Consumer Protection and Competition Act of 1992, cable TV
providers are required to transmit local analog programs to their customers. This
decision was based on the reasoning that since cable TV has a predominant position
in the market, “without mandatory carriage provisions, the economic viability of
local broadcast television and its ability to produce quality local programming would
be jeopardized.”38
The broadcasters (primarily the smaller networks and independent stations,
represented by the Association of Local Television Stations, but also the National
Association of Broadcasters) believe that the same principles and conclusions of the
1992 Act should apply to DTV services, leading to mandatory carriage of the DTV
programming by cable operators. Broadcasters argue that because most Americans
receive their TV via cable, the carriage of DTV programming by cable providers is
essential for consumers to purchase DTV receivers.
The cable companies (led by the National Cable Television Association, NCTA)
oppose any “must carry” requirements for cable operator carriage of DTV
programming, arguing that it would be an unlawful taking of their property, and that
they should be able to decide what content they provide on their own networks.
NCTA points out that, unlike the broadcasters who were given free spectrum licenses
for DTV, cable operators must build their own infrastructure to be able to transmit
DTV signals. Cable operators say they will carry broadcasters’ DTV programming
as soon as consumer demand warrants it. Cable television services provide a finite
number of channels to consumers, and any mandate to provide DTV programming
would require cable companies to remove other non-broadcast channels. Many cable
operators are investing in the upgrades needed to provide DTV, although the video
transmission standards adopted by cable operators may not be the same as those used
by the broadcasters. This could mean that different home equipment may be
necessary for cable services than for over-the-air TV reception. In addition, HDTV
programming will require cable operators to build a more robust transmission (i.e.,
greater bandwidth) capability than is required by SDTV, and some cable operators
may want to offer SDTV but not HDTV services. The cable industry also contends
that mandating carriage of all DTV broadcast transmissions will financially devastate
many smaller cable operators.
Responding to the debate between the broadcast and cable industries over
whether cable TV providers should be required to transmit DTV programming, in
38 Ibid., p. 5. Satellite television is also subject to must carry requirements. See CRS Report
RS20425, Satellite Television: Provisions of the Satellite Home Viewer Improvement Act
and the Launching Our Communities Access to Local Television Act, and Continuing Issues,
by Marcia S. Smith.

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CRS-14
July 1998 the FCC initiated a proceeding on the matter.39 On January 22, 2001, the
FCC announced its adoption of rules for cable carriage of digital TV signals. Most
notably, the FCC ruling did not require cable systems to simultaneously carry both
the analog and digital signals (“dual carriage”) of local TV stations. The FCC
tentatively concluded that “such a requirement appears to burden cable operators’
First Amendment interests more than is necessary to further a substantial
governmental interest.”40 While not approving a dual carriage mandate, the FCC did
rule that a digital-only TV station, whether commercial or non-commercial, can
immediately assert its right to carriage on a local cable system. Additionally, a TV
station that returns its analog spectrum and converts to digital operations must be
carried by local cable systems. Cable systems must carry “primary video,” defined
as a “single programming stream and other program-related content.”
The FCC continued to examine the must-carry issue through 2004. Of particular
interest was how must-carry rules would ultimately apply to “digital multicasting.”
Digital multicasting refers to the ability of broadcasters to divide their 6 MHz of
digital spectrum into separate and discrete streams of content. Thus, for example,
a broadcaster could transmit alternate channels of programming, data, or interactive
services in addition to its primary video broadcast. At issue is whether cable
operators should be required to carry any or all multicasted channels transmitted by
broadcasters as part of their 6 MHz digital allotment. Broadcasters argue that their
incentive to develop additional digital programming streams is diminished if they
have no guarantee that cable systems will carry that programming. Cable providers
counter that their decision whether or not to carry additional programming streams
from a broadcaster should be dictated by the market, rather than mandated.
On January 31, 2005, the National Cable Television Association (NCTA) and
the Association of Public Television Stations (APTS) announced an agreement under
which cable companies would provide dual-carriage (both analog and digital) of at
least one public television station in a market during the transition, as well as
carrying up to four multicasts of public stations after the transition. Under the
agreement, APTS will no longer lobby the FCC or Congress for government must-
carry mandates.
On February 10, 2005, the FCC affirmed its prior decision that cable operators
are not required to carry more than a single digital programming stream from any
particular broadcaster. The FCC also affirmed the previous tentative conclusion not
to impose a dual carriage requirement on cable operators.
Mandating Digital Tuners. Currently, about 1% of American households
have purchased DTVs equipped or accompanied with digital tuners that can receive
over-the-air digital broadcast signals. Some groups (for example, broadcasters)
advocate a government mandate that would require new televisions to contain built-
in digital tuners.
39 FCC Notice of Proposed Rule Making on Carriage of Transmissions of Digital Television
Broadcast Stations, CS Docket No. 98-120, released July 10, 1998.
40 See [http://www.fcc.gov/Bureaus/Cable/News_Releases/2001/nrcb0103.html].

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CRS-15
A study conducted by Arthur D. Little (and commissioned by the National
Association of Broadcasters and the Association of Maximum Service Television)
estimates that DTV set penetration would reach 75.5% by 2006, if the FCC were to
mandate that all new sets sold after January 1, 2004 have DTV reception capability.
Supporters of a mandate argue that requiring digital tuners would ensure a quicker
penetration of DTVs into American households, thereby giving digital content
providers and distributors greater incentive to produce and transmit digital content.
Consumer electronics manufacturers and many consumer advocates oppose a
digital tuner mandate, arguing that it would raise prices of television sets beyond the
means of many consumers.41 Opponents also dispute whether a digital tuner mandate
would effectively hasten the DTV transition, since most households currently receive
their primary television service via cable or satellite and therefore may not require an
over-the-air digital reception capability. Finally, they argue that a digital tuner
mandate would constitute an inappropriate, unnecessary, and counterproductive
government intervention into an increasingly dynamic digital television marketplace.
On August 8, 2002, the FCC adopted a phase-in plan requiring most new
television sets to contain digital tuners by 2007. Specifically, the FCC’s Second
Report and Order and Second Memorandum Opinion and Order (FCC 02-230)
requires all television sets with screen sizes of at least 13 inches, and all television
receiving equipment (such as video cassette recorders and DVD players/recorders to
include DTV reception capability according to the following schedule:
Receivers with screen sizes 36 inches and above — 50% of a responsible
party’s units must include DTV tuners effective July 1, 2004; 100% of
such units must include DTV tuners effective July 1, 2005.
Receivers with screen sizes 25 to 35 inches — 50% of a responsible
party’s units must include DTV tuners effective July 1, 2005; 100% of
such units must include DTV tuners effective July 1, 2006.
Receivers with screen sizes 13 to 24 inches — 100% of all such units
must include DTV tuners effective July 1, 2007.
TV Interface Devices VCRs and DVD players/recorders, etc. that receive
broadcast television signals — 100% of all such units must include DTV
tuners effective July 1, 2007.
The FCC’s phase-in plan was opposed by the Consumer Electronics Association
(CEA), consumer groups, and antitax groups. The CEA, citing the “scant percentage
of households relying on over-the-air television reception” argued that the mandate
is a “multi-billion dollar TV tax on American consumers,” and called instead for an
FCC mandate on cable-DTV compatibility standards.42 This position was countered
by the National Association of Broadcasters, who argued that the mandate is
41 Estimated at an initial cost of $200 per set (see April 6, 2001 Comments of the CEA to
the FCC, MM Docket No. 00-39). This figure is disputed by broadcasters (see May 7, 2001
Comments of NAB/MSTV/ALTV to the FCC, MM Docket No. 00-39).
42 Consumer Electronics Association, Americans Should Not Be Forced to Buy DTV Over-
the-Air Tuners Says CEA, Press release, August 8, 2002, available at [http://www.ce.org/
press_room/press_release_detail.asp?id=10012].

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CRS-16
necessary to hasten the DTV transition and ensure the survival of free over-the-air
broadcasting, which NAB says is currently received by roughly one third of all TV
sets in use.43
Subsequently, the agreement between the consumer electronics and cable
industries on a cable-DTV interoperability standard has dampened CEA’s opposition
to the digital tuner mandate, because the circuitry enabling “plug and play”
compatibility between digital televisions and cable systems could be modified to
receive digital over-the-air signals at an incremental cost.44 However, in November
2004, the CEA, along with the Consumer Electronics Retailers Coalition (CERC),
petitioned the FCC to eliminate the deadline of July 1, 2005 for digital tuners in 50%
of televisions in the 25 to 36 inch screen size range. Alternatively, CEA and CERC
proposed that the digital tuner deadline for all (100%) of televisions in that size range
be moved up from July 1 to March 1, 2006. On February 14, 2005, the FCC
announced a Notice of Proposed Rulemaking to consider whether to adjust the
schedule by which televisions with screen sizes of 25 to 36 inches are required to
contain digital tuners.
Copyright Protection Technology. Many content providers (e.g. movie
studios and broadcast networks) are reluctant to provide high quality digital content
to DTV owners until they are assured that interoperability standards and technology
licensing agreements are in place to prevent consumers from making unauthorized
copies and Internet transmissions of digital content. In 1998, five consumer
electronics manufacturing companies — Hitachi, Intel, Matsushita, Sony, and
Toshiba — formed an entity called the Digital Transmission Licensing
Administrator (DTLA, also known as “5C”) to license a jointly developed Digital
Transmission Content Protection (DTCP) technology. DTCP is designed to protect
audiovisual and audio content against unauthorized interception or retransmission in
the digital home environment.
On July 17, 2001, two major studios — Warner Bros. and Sony Pictures
Entertainment — announced a licensing agreement to adopt DTCP. The agreement
is designed to permit the studios to protect prerecorded media, pay-per-view, and
video-on-demand transmissions against unauthorized copying, and to protect all
content against unauthorized Internet retransmission, while assuring consumers’
ability to continue customary home recording of broadcast and subscription
programming.45
Broadcast Flag. While DTCP protects content delivered to the home via
cable or satellite, the technology does not protect over-the-air broadcast content.
Other major studios have been reluctant to sign licensing agreements with DTLA
43 National Association of Broadcasters, Fact Vs. Myth: The DTV Tuner Integration Debate,
available at [http://www.dtvprofessional.com/2002/08_aug/editorials/nab_dvttuners.htm].
44 Clark, Drew, “Electronics Group Shows Flexibility on Digital TV Issue,” National
Journal’s Technology Daily, January 27, 2003.
45 DTLA Press Release, “DTLA, Sony Pictures Entertainment and Warner Bros. Announce
First Studio Licenses for Digital Home Network Technology,” July 17, 2001, see
[http://www.dtcp.com/data/press/DTCP_PRESS_010717.pdf].

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CRS-17
until broadcast content can also be protected. Additionally, broadcast networks
(ABC, CBS, and Fox) have opposed the 5C standard, arguing that the technology’s
inability to encrypt over-the -air broadcasts will cause high quality content to migrate
toward cable and satellite exclusively. A week after the 5C agreement with Sony
Pictures and Warner Bros. was announced, the five other major studios (Disney,
Paramount, Fox, Universal, and MGM) submitted a proposal to DTLA which would
require digital broadcast content to be encrypted with a “broadcast flag” preventing
Internet distribution or retransmission of digital content broadcast over-the-air. On
June 3, 2002, a group of engineers from the motion picture and technology
industries46 released a detailed “broadcast flag” proposal. While the proposal is
strongly supported by the content industry, the technology industry remains divided,
with some companies supporting and others opposing this particular proposal. Some
consumer groups have also expressed opposition.
Those supporting a broadcast flag (such as the Motion Picture Association of
America and other content providers) argue that the protections against piracy offered
by a broadcast flag are crucial to ensure that content providers make high-value
programming available over the digital airwaves. Supporters also argue that a
broadcast flag will not prevent consumers from making physical copies of DTV
programs, or from distributing such copies within a person’s home digital network.
Opponents of a broadcast flag (many consumer electronics and high tech companies,
as well as consumer groups) assert that because electronic devices will have to be
meet certain specifications in order to process the broadcast flag, the innovation and
functionality of consumer electronics equipment will be adversely affected.
Additionally, they argue, because the broadcast flag would effectively ban any
retransmission not approved by content providers, legitimate consumer rights (e.g.
“Fair Use”) would be compromised.
On August 9, 2002, the FCC issued a notice of proposed rulemaking (FCC 02-
231, MB Docket 02-230) in the matter of digital broadcast copy protection. Noting
that the lack of digital broadcast copy protection is a significant impediment to the
DTV transition, the FCC solicited public comment on whether the FCC can and
should mandate the use of a copy protection mechanism for digital broadcast
television. The comment period closed on February 18, 2003; over 6000 comments
were received, most from individual citizens.
On November 4, 2003, the FCC adopted a rule which gives broadcasters the
option of inserting a “broadcast flag” into their over-the-air broadcast transmissions.
By July 1, 2005, all consumer electronics devices capable of receiving an over-the-air
DTV signal must be manufactured to incorporate content protection technologies that
will limit the redistribution of digital television content when the broadcast flag is
recognized. Before DTV devices can be manufactured, however, content protection
technologies must be approved. The FCC has established an “interim procedure”
whereby parties will certify that their content protection technology meets FCC
criteria. After a period of public comment, the FCC will determine whether or not
to approve that particular technology. The FCC issued a Further Notice of Proposed
46 The Broadcast Protection Discussion Group (BPDG), a subgroup of the Copy Protection
Technical Working Group (CPTWG).

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CRS-18
Rulemaking in order to formulate a permanent approval procedure for content
protection technology.47 On August 4, 2004, the FCC adopted a Report and Order
approving thirteen digital output protection technologies and recording methods.48
On February 22, 2005, the U.S. Circuit Court of Appeals for the District of
Columbia heard an appeal filed in March 2004 by consumer groups objecting to the
FCC rule mandating that copy protection technology be included in digital televisions
and related electronics by July 1, 2005. The Court questioned the FCC’s authority
to mandate broadcast flag requirement, while also questioning the legal basis for the
lawsuit. A decision is expected within several months.

Analog Hole. Another copyright protection issue of concern to content
providers is what’s commonly referred to as the “analog hole.” In the foreseeable
future, many consumers will continue to use analog televisions. In order to display
the content carried by digital signals, analog televisions will be equipped with a
digital tuner (a set-top box) which converts the signal from digital to analog. At this
point, the digital signal, even if content protected, is converted into an unprotected
analog form which could then be easily converted into a similarly unprotected digital
form subject to the unauthorized copying and Internet transmission the content
providers are seeking to prevent. Accepted copyright protection technologies to
“plug” the “analog hole” have not yet been developed, and will likely require further
technology development and negotiation involving the content providers and
consumer electronics manufacturers.
Cable/DTV Interoperability Standards. Interoperability standards between
digital televisions and cable systems are necessary in order for consumers to be able
to watch digital programming over their cable systems. Currently, interoperability
is achieved via the proprietary set-top box leased to the subscriber by the local cable
company. Given the absence of a national interoperability standard, consumers are,
at present, unable to purchase DTV products from consumer electronics stores which
can be directly connected to cable systems without the use of a set-top box. Two
separate entities — the consumer electronics industry (including manufacturers and
retailers) and the cable system operators — have embarked on an often contentious
process of determining the specific technical details of how DTV devices might
achieve nation-wide compatibility and interoperability with cable systems.
Section 304 of the Telecommunications Act of 1996 directed the FCC to adopt
regulations to assure the commercial consumer availability of “navigation devices”
(i.e. set-top boxes, remote control units) without jeopardizing the rights of a cable
provider to protect its signal from theft. Currently, proprietary set-top boxes are
“integrated” with two overall functions: security and navigation (i.e. allowing the
subscriber to flip from channel to channel). A 1998 order adopted by the FCC (FCC
98-116) requires the cable operators to separate the security functions from non-
47 FCC Report and Order and Further Notice of Proposed Rulemaking in the Matter of
Digital Broadcast Content Protection , MB Docket No. 02-230, FCC 03-273, released
November 4, 2003.
48 FCC Order in the Matter of Digital Output Protection Technology and Recording
Method Certifications, FCC 04-193, released August 12, 2004.

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CRS-19
security functions and to make available (by July 1, 2000) modular security
components to the consumer electronics industry.49 Allowing time for transition, the
FCC would prohibit the sale or lease of new “integrated” boxes as of July 1, 2006.
On February 22, 2000, the Consumer Electronics Association (CEA) and the
National Cable Television Association (NCTA) announced a voluntary agreement
on a set of technical requirements that permit the direct connection of digital
television receivers to cable television systems. In January 2002, CableLabs (a
research organization of the cable industry) published specifications for the
OpenCable Applications Platform (OCAP), which would serve as a uniform
interoperability cable/DTV standard. However, consumer electronics manufacturers
and retailers and the cable industry sharply disagree over the pace and specific
technical details (including copy protection requirements) of how interoperability
should be implemented.
Disagreement over DTV/cable interoperability continues was prominently aired
during the September 25, 2002 House Energy & Commerce Committee hearings on
the digital transition. NCTA argued that proprietary set-top boxes already allow a
seamless DTV/cable interoperability, that there are, therefore, no compatibility
problems between DTVs and cable systems, and that consumers’ inability to
purchase cable-ready DTVs or set-top boxes from consumer electronics stores is not
a critical component of the digital transition. However, regardless of digital
transition issues, the cable industry said it supports the retail availability of cable-
ready DTV products because it is in its own business interest to do so.50 NCTA added
that it has developed the required interoperability standards, and is further advocating
a “DVI connector” on all integrated DTV sets, which would allow consumers to
upgrade and receive advanced interactive services from their cable or satellite
provider.51
An opposing view was expressed at the hearings by consumer electronics
manufacturers and retailers. A spokesperson for the Consumer Electronics Retailers
Coalition (CERC) argued that interoperability standards will be ineffective unless
and until the cable industry’s own proprietary equipment relies on and supports those
same standards. Without that reliance and support, they argued, interoperable DTV
devices manufactured by the consumer electronics industry cannot be competitive (in
49 Also referred to as a Point of Deployment or “POD” module, this would consist of a smart
card that could be inserted into the consumer electronics device to provide the security
required by the cable operator. A “national security interface” is required to ensure that
POD modules from all the different local cable operators would satisfactorily operate in
every device. To manufacture a “POD reliant” device, the manufacturer must sign a POD-
Host Interface License Agreement (“PHILA”).
50 Subscribers of satellite TV (“DBS,” the primary competitor to cable) can use the same
equipment anywhere in the country. This “portability” gives DBS a marketing advantage
over cable.
51 Testimony of Michael Wilner, Vice Chairman and CEO, Insight Communications, and
Chairman, NCTA, before the House Subcommittee on Telecommunications and the Internet,
September 25, 2002.

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CRS-20
terms of cost or functionality) with the cable industry’s proprietary equipment.52
Additionally, testimony from a consumer electronics manufacturer stated opposition
to a mandated and ungradable connector on all DTVs, arguing that this equipment
is likely not needed on small and mid-size televisions, and that making such
connectors compatible with future digital technologies is a “daunting, if not
impossible, task.”53
On December 19, 2002, the cable and consumer electronics industries
announced they had reached an agreement on a cable compatibility standard for an
integrated, unidirectional digital cable television receiver. The two industry groups
filed a Memorandum of Understanding (MOU) with the FCC, outlining the
agreement. According to the MOU, the industries will continue to negotiate a
“bidirectional” standard that would enable consumers to receive advanced services
(such as video on demand) without the need for an external navigation device. On
January 7, 2003, the FCC issued a Further Notice of Proposed Rulemaking (FCC 03-
3) which seeks comment on the MOU and proposed FCC rules which would be
necessary to implement the industry agreement. Opposition to the agreement’s
“encoding rules” has been expressed by several organizations, including the Motion
Picture Association of America, makers of personal video recording technology
(TiVo), and consumer groups.
On September 10, 2003, the FCC adopted a Second Report and Order which
adopts, with certain modifications, the MOU agreement between the cable and
consumer electronics industries. The new rules allow for the manufacture of “plug
and play” television sets that will receive one-way digital signals (from the cable
company to the consumer) without the need for a set-top box. However, consumers
will have to obtain from their cable operator a security card (a “POD” or
“CableCARD”) that must be inserted into the TV set. A set-top box will still be
required for two-way services such as video on demand or pay-per-view. The cable
and consumer electronics industry are continuing to negotiate over this issue.
Finally, the Order initiated a subsequent proposed rulemaking (Second Further
Notice of Proposed Rulemaking) which will examine some remaining issues.54
Currently, the cable industry and the consumer electronics industry are in
dispute over the deadline set by the FCC (FCC 98-116) which would prohibit the sale
or lease by cable providers of set-top boxes with integrated security as of July 1,
2006. Under the current FCC rule, after July 1, 2006, the security of the digital signal
will be protected by a CableCARD (supplied by the cable provider) which can be
inserted into the “plug and play” television set, and allow consumers to view
scrambled programming. Cable companies are arguing to the FCC that the July1,
52 Testimony of Alan McCullough, Chairman, President & CEO, Circuit City Stores, Inc.,
representing CERC, before the House Subcommittee on Telecommunications and the
Internet, September 25, 2002.
53 Testimony of Richard M. Lewis, Chief Technology Officer, Zenith Electronics
Corporation, before the House Subcommittee on Telecommunications and the Internet,
September 25, 2002.
54 FCC Press Release, FCC Eases Digital Transition for Consumers, September 10, 2003,
available at [http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-238850A1.pdf].

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CRS-21
2006 deadline should be extended eighteen months, if not eliminated altogether.
Cable providers argue that imposing the ban would divert industry resources from
developing low-cost digital set-top boxes and next-generation network architect
security for cable services. The consumer electronics industry, on the other hand,
argues that if the July 1, 2006 deadline is extended or eliminated, the value of
CableCARD technology to consumers will be diminished, thereby making it more
likely that consumers will not purchase “plug and play” digital sets with integrated
tuners, and continue to opt for sets which rely on the set-top boxes supplied by cable
providers.
Digital Conversion of Public Broadcasting Stations. The FCC set a
deadline of May 1, 2003 for public television stations to convert to digital. Public
television consists of 176 licensees operating 357 stations nationwide. According to
the Association of America’s Public Television Stations (APTS), as of July 2004,
263 public television stations were offering digital broadcast services, covering 87%
of all U.S. TV households. Meanwhile, 214 noncommercial educational stations
requested extension of the May 1, 2003 buildout deadline. The FCC has granted all
of those extension requests; 134 stations filed for second extensions, with 129
granted.55
Raising money for the digital conversion is a challenge for many public
television stations, especially those in small markets. According to APTS, the total
nationwide cost of conversion is $1.7 billion. State governments have provided most
of the funding to date, about $476 million, with private sources providing $260
million. The federal government has provided $221 million.56 Public broadcasters
have been seeking a substantial federal contribution ($699 million over five years)
for digital conversion. This funding would be used to pay for the new equipment
and physical infrastructure required for digital conversion (e.g. transmitters,
translators, and production equipment). Public stations are seeking this funding from
the Public Telecommunications Facilities Program (PTFP), a grant program
administered by the National Telecommunications and Information Administration
(NTIA) at the Department of Commerce.
The PTFP, which has provided matching grants for public broadcasting
equipment for over 35 years, has begun funding digital conversion, awarding $15.7
million for 44 digital television conversion projects in FY1999, $18 million for 31
projects in FY2000, $35 million for 52 projects in FY2001, and $36 million for 52
projects in FY2002, $25 million for 56 projects in FY2003, and $9.8 million for 31
projects in FY2004.
For FY2004, the Administration proposed to suspend all grants under the PTFP.
As an alternative, the Administration proposed making $80 million available for the
digital transition from the Corporation for Public Broadcasting’s already enacted
FY2004 funding. The FY2004 CJS bill (H.R. 2799, H.Rept. 108-221), as passed by
the House on July 23, 2003, also provided no funding for PTFP grants. The Senate
version of the FY2004 CJS bill (S. 1585, S.Rept. 108-144), as reported, would
55 See [http://www.fcc.gov/mb/video/files/dtvsum.html].
56 Communications Daily, May 1, 2003, p. 10.

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CRS-22
provide $55 million for PTFP. The FY2004 Consolidated Appropriations Act (P.L.
108-199) provided $22 million for PTFP in FY2004.
For FY2005, the Administration again proposed terminating the PTFP. As an
alternative, the Administration proposed funding of $20 million for digital transition
grants for public television stations from within the Corporation for Public
Broadcasting’s already enacted FY2005 funding of $390 million. The House
FY2005 CJS bill (H.R. 4754), as passed, would also terminate the PTFP. The Senate
FY2005 CJS bill (S. 2809) would provide $21.77 million for PTFP. The FY2005
Consolidated Appropriations Act (H.R. 4818/P.L. 108-447) provides $21.77 million
for PTFP. For FY2006, the Administration again is proposing the termination of the
PTFP.
Whereas PTFP grants go for equipment, federal funds from the Corporation for
Public Broadcasting (CPB) are supporting the development and distribution of digital
content. For FY2001, the Labor-HHS-Education Appropriation Act (P.L. 106-554)
appropriated $20 million to CPB for investment in DTV programming and
distribution, but required congressional authorization before it could be released.
The FY2001 Supplemental Appropriations Act (H.R. 2216, P.L. 107-20, signed July
24, 2001) contained language authorizing release of those funds to CPB. For
FY2002, the Administration requested an additional $20 million for CPB for the
purposes of digital conversion. Both House and Senate versions of the FY2002
Labor-HHS-Education appropriation bills (H.R. 3061, H.Rept. 107-229/S. 1536,
S.Rept. 107-84) sought to provide $25 million to CPB for digital conversion. The
House bill would provide the funding pending authorization legislation. The Labor-
HHS conference report (H.Rept. 107-342) provided $25 million for equipment and
facilities to enable public broadcasters to meet the statutory deadline for digital
conversion as proposed by the Senate. The conference agreement did not provide
these funds contingent upon authorization as proposed by the House. The bill was
signed into law (P.L. 107-116) on January 10, 2002.
For FY2003, the 108th Congress, the FY2003 Omnibus Appropriations (P.L.
108-7) provided $48.7 million to CPB for digital conversion. The Administration’s
FY2004 budget proposal requested that $80 million of CPB’s already enacted
FY2004 appropriation be allocated to digital conversion. The House version of the
FY2004 Labor-HHS-Education appropriations bill (H.R. 2660, H.Rept. 108-188), as
passed by the House on July 10, 2003, matched the Administration proposal. The
Senate Labor-HHS-Education appropriations bill (S. 1356, S.Rept. 108-81) provided
an additional $55 million in “new money” for digital conversion in FY2004.
Ultimately, the FY2004 Consolidated Appropriations Act (P.L. 108-199) provided
$50 million in “new money” to CPB specifically for digital conversion.
The FY2005 House Labor-HHS-Education appropriations bill (H.R. 5006,
passed by the House on September 9, 2004) designates up to $20 million for digital
conversion from CPB’s already enacted FY2005 appropriation. The Senate version
of the FY2005 Labor-HHS-Education appropriations bill (S. 2810, reported by the
Senate Appropriations Committee, September 14, 2004) would provide $49.7 million
in “new money” for digital conversion. The FY2005 Consolidated Appropriations
Act (H.R. 4818/P.L. 108-447) provides $39.7 million in “new money” for digital
conversion.

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CRS-23
The Administration’s FY2006 budget proposal recommends that $30 million
of CPB’s already enacted FY2006 budget be allocated to digital conversion.
Additionally, the FY2004 Senate Agriculture Appropriations bill (S.
1427;S.Rept. 108-107) provided $15 million in public broadcasting system grants
(from the Distance Learning and Telemedicine account of the Rural Utilities Service)
to allow noncommercial stations that serve rural areas to convert from analog to
digital operations. Within the agriculture appropriations section of P.L. 108-199, the
Distance Learning and Telemedicine account of the Rural Utilities Service includes
$14 million in FY2004 to assist digital conversion of rural public television stations.
The FY2005 House Agriculture Appropriations bill (H.R. 4766), as passed,
includes no funding for digital television conversion. The FY2005 Senate
Agriculture Appropriations bill (S. 2803; S.Rept. 108-340), approved by the Senate
Appropriations Committee on September 14, 2004, would provide $13 million for
digital conversion. The FY2005 Consolidated Appropriations Act (H.R. 4818/P.L.
108-447) provides $10 million for public television digital conversion.
Satellite Television and “Digital White Areas”. Under current law,
satellite television providers are permitted to provide distant network signals (from
“out of market” network affiliates) only to subscribers living in “white areas” —
meaning they receive inadequate analog television broadcast signals from their local
broadcasters. Legislation was introduced into the 108th Congress (H.R. 4501/H.R.
4518/S. 2644) which would explore the possibility of creating “digital white areas”
such that some subscribers may be eligible for distant network digital signals via their
satellite dish if they cannot receive local digital TV signals. In November 2004,
Congress passed the Satellite Home Viewer Extension and Reauthorization Act
(SHVERA) as part of the FY2005 Consolidated Appropriations Act (H.R. 4818/P.L.
108-447). SHVERA provides limited authority for satellite companies to offer
“distant digital signals” if certain conditions are met. For more information on this
issue, see CRS Report RS21990, Satellite Television and “Digital White Areas”:
Provisions of the 2004 Satellite Home Viewer Extension and Reauthorization Act by
Marcia S. Smith.

Low Power TV. Low Power Television (LPTV) was created by the FCC in
1982 to serve rural areas and individual communities within larger urban areas.
LPTV stations may not exceed 3 kilowatts for VHF channels or 150 kilowatts for
UHF channels, and must not cause interference in the reception of full service
television stations. Currently, there are 2119 LPTV stations in the United States.
Concerns have arisen that many LPTV stations will lose their licenses in the
transition to DTV. While the FCC’s February 1998 modification to its table of
allotments for DTV licensees did provide for some LPTV licensees to be relocated
to new frequencies, many would still lose their licenses under FCC digital transition
plans. To provide some relief for LPTV licensees, the Community Broadcasters
Protection Act of 1999 was enacted as part of the Intellectual Property and
Communications Omnibus Reform Act of 1999 (P.L. 106-113). This law established
a “class A” status to qualifying LPTV licensees, giving them a measure of protection
from full-power TV stations in the transition to DTV. The act directs that class A
licensees be accorded primary status as television broadcasters, prescribes the criteria
LPTV stations must meet to be eligible for class A status, and outlines the

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CRS-24
interference protection class A stations must provide to other television stations. To
implement the act, in April 2000, the FCC established rules for class A LPTV
licensees, to facilitate the acquisition of capital for LPTV stations to continue to
provide free, over-the-air programming to their communities.57
In accordance with the 1992 Cable Act (47 USC 534), cable television providers
are required to transmit to their audiences the locally-generated programming of all
full-power TV broadcasters that request carriage, a provision known as “must-carry.”
Under the 1992 Act, some LPTV stations are entitled to “must-carry”status if they
meet certain criteria.58 The FCC’s April 2000 ruling did not address the question of
whether class A licensees should be entitled to the “must-carry” provision, as are
full-power broadcast TV stations. A petition filed with the FCC argued that class A
licenses should be granted the same “must-carry” status as full-power broadcasters.
The FCC subsequently ruled that class A stations do not have the same must carry
rights as full service television stations.59 The Local Voices on TV Act of 2003 (H.R.
1626, introduced April 3, 2003 by Representative Peterson of Minnesota) would
provide cable carriage rights for qualified class A television stations.
On August 6, 2003 the FCC adopted a Notice of Proposed Rulemaking60 to seek
comment on rules for digital low power television and digital television translator
stations. On September 9, 2004, the FCC adopted rules to allow for the digital
conversion of LPTV and translator stations. While requiring the conversion to digital
operation, the FCC did not set a digital transition deadline for LPTV and translator
stations. The final transition date — on which analog operations will cease — will
be considered in the FCC’s Third DTV periodic review proceeding.61
Meanwhile, the FCC Reauthorization Act of 2003 (S. 1264; S.Rept. 108-140),
introduced by Senator McCain on June 13 and reported by the Senate Committee on
Commerce, Science and Transportation on September 3, 2003, would direct the FCC
to initiate a rulemaking to authorize the operation of digital television translators and
digital on-channel repeaters.
57 FCC Report and Order in the Matter of Establishment of Class A Television Service, MM
Docket No. 00-10, FCC 00-115, released April 4, 2000.
58 Those criteria (47 USC 534) include (among other requirements) that the community of
license of the LPTV station has a population not exceeding 35,000, that there is no full-
power TV station licensed to any community within the county or other political subdivision
(of a state) served by the cable system, and that the LPTV station provides the only news
coverage in its community of license.
59 FCC Memorandum Opinion and Order on Reconsideration in the Matter of Establishment
of Class A Television Service, MM Docket No. 00-10, FCC 01-123, released April 13, 2001.
60 FCC Notice of Proposed Rulemaking in the Matter of Amendment of Parts 73 and 74 of
the Commission’s Rules to Establish Rules for Digital Low Power Television, Television
Translator, and Television Booster Stations and to Amend Rules for Digital Class A
Television Stations, MB Docket No. 03-185, FCC 03-198, released August 29, 2003.
61 For further information, see:
[http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-251978A1.pdf]

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CRS-25
Fees for Ancillary or Supplemental Services. The Telecommunications
Act (P.L. 104-104) states that if a DTV licensee offers ancillary or supplemental
services for which they receive a subscription fee or other compensation, the FCC
“shall establish a program to assess and collect from the licensee...an annual fee or
other schedule or method of payment ...” The act further states that the collection of
fees “shall be designed (i) to recover for the public a portion of the value of the
public spectrum resource made available for such commercial use, and (ii) to avoid
unjust enrichment through the method employed to permit such uses of that
resource.”62 Congress is overseeing the FCC’s actions regarding implementation of
this law. Public interest groups have also maintained pressure on the FCC to establish
a fee program, arguing that broadcasters should compensate the American people for
the use of the DTV spectrum, and that fees should be required out of fairness to those
who paid for spectrum at FCC auctions (such as licensees for personal
communications services).
In November 1998, the FCC adopted rules to require broadcasters to pay 5% of
their gross revenues from ancillary or supplementary uses of DTV spectrum for
which they charge subscription fees or other specified compensation.63 These
include subscription video, software distribution, data transmissions, teletext,
interactive materials, aural messages, paging services, and audio signals. Home
shopping channels and “infomercials” are not subject to fees because the FCC did not
consider them new services. The FCC has initiated a separate proceeding to
determine how much non-commercial stations can use the DTV spectrum for
revenue-generating services, and whether they should have to pay spectrum fees.
Some consumer groups say that the FCC’s spectrum fees are not heavy enough on
commercial broadcasters, arguing that most revenue will come from home shopping
and infomercials. They also warn that public broadcasters should not be over-
regulated, arguing that too heavy a burden placed on public broadcasters could impair
their long-term viability.
On October 11, 2002, the FCC ruled that noncommercial stations are required
to use their entire digital capacity primarily for nonprofit, noncommercial,
educational broadcast services. However, the FCC also ruled that the statutory
prohibition against advertising on noncommercial broadcasts does not apply to any
ancillary or supplementary services presented on an excess DTV channels that does
not constitute broadcasting. The FCC further ruled that public stations must pay a
fee of five percent of gross revenues generated by ancillary or supplementary services
provided on their DTV service.64
62 The Budget Resolution of 1997 (H.Con.Res.84) included a provision requiring
broadcasters to pay a spectrum usage fee of $2 billion over five years. Broadcasters strongly
opposed that provision, however, and it was not included in the Budget Act of 1997.
63 FCC Report and Order on Fees for Ancillary or Supplementary Use of Digital Television
Spectrum, MM Docket No. 97-247, released November 19, 1998.
64 FCC Report and Order in the Matter of Ancillary or Supplementary Use of Digital
Television Capacity by Noncommercial Licensees, MM Docket No. 98-203, FCC 01-306,
released October 17, 2001.

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CRS-26
Public Interest Obligations of DTV Broadcasters. In March 1997,
President Clinton established an Advisory Committee on Public Interest Obligations
of DTV Broadcasters, to make recommendations on how DTV licensees should
compensate the public for their licenses. Committee members were selected from
government, the broadcasting industry, academia, and consumer interest
organizations. After a series of public meetings in 1997 and 1998, the Committee
submitted a set of recommendations to Vice President Gore in December 1998. The
recommendations consist of mostly voluntary actions by broadcasters, including
providing five minutes per night of air time for candidate-centered discourse in the
30 days prior to an election. Some panel members wanted to recommend mandating
the free air time as well as other Committee proposals. The White House referred the
report to the FCC, which on December 15, 1999, opened a Notice of Inquiry (NOI)
proceeding to solicit public comment on public interest obligations of TV
broadcasters as they transition to DTV (MM Docket No. 99-360).
After reviewing public comment, the FCC, in September 2000, issued the DTV
Public Interest Form Notice of Proposed Rulemaking (NPRM) which sought to
require television broadcasters (both digital and analog) to disclose on a quarterly
standardized form how they are serving the public interest. Also in September 2000,
the FCC issued the Children’s DTV Public Interest NPRM (MM Docket No. 00-
167), which focused on the obligation of broadcasters to provide educational and
informational programming for children, and the requirement that licensees limit
advertising in children’s programs. The FCC has not yet issued any decisions in
those proceedings. Given the significant amount of time that has passed, the Second
Periodic Review of FCC rules and policies affecting DTV conversion, issued on
January 27, 2003, has asked for further comment on the public interest obligation
issue.65 On August 4, 2004, the FCC adopted a Report and Order (FCC-04-192)
which implements several steps identified in the Second Periodic Review. However,
no action was taken regarding public interest obligations.
On September 9, 2004, the FCC adopted a Report and Order66 addressing
children’s programming obligations for digital television broadcasters. The FCC
issued guidelines on the obligation to provide educational programming for children
and the requirement that children are protected from excessive and inappropriate
commercial messages. Specifically, the Order increases the required amount of core
educational programming proportionally to the amount of increased free video
programming offered by the broadcaster on multicast channels. Regarding
commercial limitations, the Order concludes that commercial limits apply to all
digital programming directed at children 12 and under, whether the programming is
provided on a free or pay multicast channel.67
65 NPRM, Second Periodic Review of the Commission’s Rules and Policies Affecting the
Conversion to Digital Television, p. 39-42.
66 Report and Order and Further Notice of Proposed Rulemaking in the Matter of Children’s
Television Obligations of Digital Television Broadcasters, MM Docket No. 00-167, FCC
04-221, released November 23, 2004, 54 pages.
67 For more information see:
[http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-251972A1.pdf]

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Tower Siting. One obstacle to the broadcasters’ ability to offer DTV services
is the opposition from state and local communities over the building of new signal
transmission towers.68 In most cases, DTV antennas can be built on top of existing
towers used for analog TV broadcasting. If new towers are required, however, they
must be constructed before the stations can transmit DTV signals. In August 1997,
the FCC released an NPRM (FCC 97-182) to consider the preemption of state and
local zoning restrictions on the siting, placement, and construction of DTV
broadcasting facilities. In its January 18, 2001 Report and Order, the FCC concluded
that “while some stations are facing problems with tower availability and/or local
zoning issues, such problems do not seem to be widespread at this time.”69 The FCC
will continue to monitor the situation and intends to work with the involved parties
as problems arise.
Activities in the 108th Congress
A number of bills were introduced into the 108th Congress, relating in some way
to digital television (see Appendix). Some have urged Congress to require
broadcasters to return the analog spectrum on “a date certain.” Under this approach,
spectrum would be freed up for other uses. Among legislation in the 108th Congress,
the HERO Act (H.R. 1425 and within 9/11 Commission omnibus bills H.R. 5024,
H.R. 5040, and S. 2774) would have prohibited any delay in reassigning the 24 MHz
for public safety purposes, and required those frequencies to be operational by
January 1, 2007.
During March and April 2004, another digital transition proposal was informally
circulated by the Media Bureau of the FCC.70 Under this proposal, the transition
deadline would be moved from 2006 to 2009. Cable and satellite providers would
be required to carry a broadcaster’s digital signal only, but could — if the broadcaster
so chooses — down-convert the digital signal to an analog signal that cable or
satellite customers could watch on their analog televisions. Under this scenario,
according to the Media Bureau proposal, cable and satellite TV households watching
down-converted digital signals on their analog sets would be counted toward the 85%
statutory threshold required in order for broadcasters to return to the government their
valuable analog spectrum, which can then be auctioned and/or assigned for other
purposes. Given that cable and satellite television households currently comprise
88% of all television households, it is likely that the 85% threshold will be satisfied
in most areas. Subsequently, analog spectrum would be reclaimed and analog
television sets would no longer be able to receive over-the-air television broadcasts
unless they are equipped with a converter box.
68 For more information on DTV tower siting, see [http://www.fcc.gov/mb/policy/dtv/].
69 FCC Report and Order and Further Notice of Proposed Rulemaking In the Matter of
Review of the Commission’s Rules and Policies Affecting the Conversion to Digital
Television, MM Docket No. 00-39, FCC 01-24, p. 37.
70 The Media Bureau’s digital transition proposal has not yet been released as a formal
document.

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The broadcasting industry has expressed strong opposition to the Media
Bureau’s proposal.71 According to the broadcasters, the proposal would discourage
the development of digital television services (such as HDTV and multicasting) and
remove the incentive for consumers to purchase DTVs. Additionally, they argue, if
analog spectrum is reclaimed under the Media Bureau proposal, the 12% of TV
households that are exclusively “over-the-air” — many of whom are economically
disadvantaged — would lose their television service altogether unless they purchased
DTVs, converter boxes, or cable or satellite television subscriptions. In response to
these criticisms, Kenneth Ferree, former head of the Media Bureau, argues that the
development of digital services will not be adversely impacted because market forces
will ensure that popular stations will likely be carried by cable and satellite TV
providers in both digital and analog form by 2009. Additionally, suggests Ferree,
economically disadvantaged over-the-air households could receive federal subsidies
(derived from reclaimed spectrum auction proceeds, for example) for purchasing
converter boxes, thereby ensuring that these households will continue to receive
television service.72
During the summer of 2004, Congress held three hearings on the digital
television transition. On June 2, 2004, the House Energy and Commerce Committee,
Subcommittee on Telecommunications and the Internet, held a hearing on the Ferree
proposal — “Advancing the DTV Transition: An Examination of the FCC Media
Bureau Proposal.” A June 9, 2004 hearing held by the Senate Committee on
Commerce, Science and Transportation — entitled, “Completing the Digital
Television Transition,” — also examined the Ferree proposal and other digital
transition issues including the possibility of consumer subsidies for converter boxes.
Finally, the House Subcommittee on Telecommunications and the Internet held
another hearing on July 21, 2004, looking specifically at lessons learned from Berlin,
Germany, which successfully underwent a transition to digital television in 2003.
The hearing, entitled, “The Digital Television Transition: What We Can Learn from
Berlin,” featured the release of a General Accountability Office (GAO) report
entitled, German DTV Transition Differs From U.S. Transition in Many Respects,
but Certain Key Challenges Are Similar. The GAO identified three elements
responsible for Berlin’s successful digital transition: implementing extensive
consumer education, providing subsidies to low-income households for converter
boxes, and setting a near-term, widely recognized shut-off date for analog TV
service.73
On July 22, 2004, the National Commission on Terrorist Attacks Upon the
United States (the 9/11 Commission) released its final report. The Commission
recommended that Congress support legislation “which provides for the expedited
71 Written Ex Parte Submission in MB Docket Nos. 03-15 & 98-120, April 15, 2004,
Available at
[http://www.nab.org/Newsroom/PressRel/Filings/LetterReFerreePlan041504.pdf].
72 Boliek, Brooks, “Feds: No analog TV by ‘09,” Hollywood Reporter, April 15, 2004.
73 See U.S. General Accountability Office, German DTV Transition Differs From U.S.
Transition in Many Respects, but Certain Key Challenges Are Similar, GAO-04-926T, July
21, 2004. 22 p.

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CRS-29
and increased assignment of radio spectrum for public safety purposes.” In response
to this recommendation, on September 21, 2004, Senator John McCain introduced
S. 2820, the SAVE LIVES Act. S. 2820 would change the digital transition deadline
from December 31, 2006 to December 31, 2008. Spectrum for public safety would
be freed for use by first responders, and other spectrum would be available for
commercial uses. Proceeds from the auctioning of commercial spectrum would be
credited to a Digital Transition Consumer Assistance Fund. The Fund would be used
to establish a $1 billion digital transition program, administered by the Secretary of
Commerce, which would subsidize consumers who continue to rely exclusively on
over-the-air broadcasts with analog televisions. The program would give priority to
low-income households, and would provide assistance for purchasing digital-to-
analog converter boxes or other technologies which would allow consumers to
continue receiving television signals.
S. 2820 also requires labeling of analog televisions (with the label stating it is
unable to receive digital signals without a converter box), directs the Department of
Commerce (in consultation with the FCC) to submit a report to Congress
recommending a consumer education program on the digital transition, and requires
the FCC to issue final decisions on its proceedings regarding DTV must-carry and
public interest obligations.
During the September 22, 2004 markup of S. 2820 in the Senate Committee on
Commerce, Science and Transportation, an amendment was offered by Senator
Conrad Burns which sets a digital transition deadline (December 31, 2007) only for
spectrum that has been designated for public safety, and provides that the FCC may
waive the deadline in a given market “to the extent necessary to avoid consumer
disruption while ensuring the ability of relevant public safety entities to use such
frequencies.” The Burns amendment was subsequently adopted by the Committee.

On September 29, 2004, Senator McCain offered a modified version of S. 2820
as an amendment to the National Intelligence Reform Act of 2004 (S. 2845). As in
Committee, Senator Burns offered a modifying amendment to the McCain
amendment. At the request of Senator McCain, the Senate approved by unanimous
consent the McCain amendment as modified by the Burns amendment. The final
version adopted into S. 2845 sets the digital transition deadline of December 31,
2007 only for spectrum that has been designated for public safety. Language
regarding the FCC’s authority to waive the deadline to avoid consumer disruption
was modified to read: “only if all relevant public safety entities are able to use such
frequencies free of interference by December 31, 2007, or are otherwise able to
resolve interference issues with relevant broadcast licensee by mutual agreement.”74
The Senate passed S. 2845 on October 6, 2004. Other provisions of S. 2820 relevant
to digital television are retained within the Senate-passed version of S. 2845.
However, the sections regarding the Digital Transition Consumer Assistance fund
and the $1 billion in consumer digital transition subsidies are moot, because the
legislation limits the digital transition deadline only to public safety spectrum and
does not authorize auctions of commercial spectrum currently used for analog
74 For more information on this issue, see CRS Report RL32622, Public Safety,
Interoperability and the Transition to Digital Television, by Linda K. Moore.

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CRS-30
television broadcasts. Also, labeling requirements would only go into effect if the
FCC acts to set a hard deadline for the return of analog spectrum.
The House-passed version of S. 2845 (passed on October 16, 2004) contains a
nonbinding provision (Section 5011) expressing the “sense of the Congress” that the
85% penetration test should be eliminated and that broadcasters should be required
to cease analog transmissions by December 31, 2006 in order that analog spectrum
can be returned for public safety and commercial uses. The conference report
version of S. 2845 contained a digital television provision similar to the House
language. Section 7501 states that it is the sense of Congress that “Congress must
act to pass legislation in the first session of the 109th Congress that establishes a
comprehensive approach to the timely return of analog broadcast spectrum as early
as December 31, 2006” and that any delay in the adoption of such legislation will
“delay the ability of public safety entities to begin planning to use this needed
spectrum.” The Intelligence Reform and Terrorism Prevention Act of 2004 (P.L.
108-458) was signed into law on December 17, 2004.
Activities in the 109th Congress
The 109th Congress is debating whether and how a “hard date” for the DTV
transition should be implemented, thereby freeing reclaimed analog spectrum. Key
policy questions include should the existing statutory digital transition deadline of
December 31, 2006 be implemented by modifying or removing the 85% digital
penetration threshold requirement, or would a later and redefined transition deadline
be more appropriate? Should the reclaiming of analog spectrum for public safety
uses be singularly designated, or should it be included as part of a comprehensive
approach to returning all of the analog spectrum?
Paramount in this debate is the issue of addressing the millions of American
over-the-air households whose existing analog televisions will require converter
boxes in order to receive digital signals — if and when the analog signal is turned off.
Related policy questions include should some form of financial assistance (subsidies
or tax credits, for example) be provided by the federal government to enable over-
the-air households to purchase converter boxes or digital televisions? Should such
assistance be provided to low-income households exclusively or to all households?
Should subsidies, if warranted, be financed by proceeds garnered by auctioning the
analog spectrum? And finally, how much funding would a subsidy program require,
and how much revenue is likely to be raised by auctioning the commercial portion
of the reclaimed analog spectrum?
On February 17, 2005, the House Energy and Commerce Committee,
Subcommittee on Telecommunications and the Internet, held the first of a series of
hearings on the digital transition. At the February 17th hearing, entitled, “The Role
of Technology in Achieving a Hard Deadline for the DTV Transition,” the
Government Accountability Office (GAO) testified on the results of a television
characteristics survey they commissioned involving 2,471 randomly selected
American households. Based on the survey, GAO found that 19% or 21 million
households rely exclusively on over-the-air television; 57% or 64 million households
rely on cable; and 19% or 22 million have a subscription to DBS (satellite)

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television. Additionally, GAO found that low-income, non-White, and Hispanic
households are more likely to rely on over-the-air television broadcasting.75
GAO estimated that if a subsidy were needed only for over-the-air households,
the cost could range from about $460 million to $2 billion, depending on the cost of
the set-top box (from $50 to $100 per box) and whether subsidy recipients are limited
to low-income households. Under this scenario, GAO is assuming that cable and
satellite providers would convert broadcasters’ digital signals to analog at the “head-
end,” such that cable and satellite TV consumers with analog sets would be able to
receive the signal without a converter box.
Under a different scenario, GAO assumed that cable and satellite providers
would deliver high-definition signals to the home, thereby requiring consumers with
analog sets to purchase converter boxes. GAO estimated that if subsidies were
available to cable and satellite subscribers as well as to over-the-air households, the
cost would range from $1.8 billion to over $10 billion, again depending on the cost
of the converter box and the use of means testing. The GAO estimate assumes a
subsidy for one converter box per household — it should be noted that the vast
majority of television households have more than one over-the-air analog television.
Each analog television set would need its own converter box to be able to receive a
digital signal. The National Association of Broadcasters has estimated a total of 73
million over-the-air analog sets in the U.S. On the other hand, the number of
households dependent on analog over-the-air reception could decline in future years,
as people purchase new televisions that are required (screen sizes 13 inches and over
by 2007) to include integrated digital tuners.
The GAO cost estimates also do not include the cost of implementing a subsidy
program, nor do they take into account what form a subsidy might take, be it a
voucher, tax credit, rebate, government supplied equipment, or other means. GAO
is currently working on a comprehensive DTV report, due in the summer of 2005,
which will discuss how a DTV subsidy program might be administered.76
Other issues discussed at the February 17th hearing include whether labels
warning of a possible analog signal shut-off should be required on new analog
televisions purchased by consumers. Another key issue discussed was whether
digital signals should be converted at the cable and satellite providers’ head-end, or
— alternatively — at the subscriber’s home. Finally, Dr. Jong Kim, Vice President
of Research, LG Electronics, Inc. testified that digital-to-analog converter boxes
could fall to the price range of $50 to $70 by 2008, assuming industry-wide demand
of tens of millions of units by that time.
75 See U.S. Government Accountability Office, Testimony before the Subcommittee on
Telecommunications and the Internet, Committee on Energy and Commerce, House of
Representatives, Digital Broadcast Television Transition: Estimated Cost of Supporting Set-
Top Boxes to Help Advance the DTV Transition, February 17, 2005. Available at
[http://www.gao.gov/new.items/d05258t.pdf]
76 Ibid., p. 16.

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A second hearing, entitled, “Preparing Consumers for the End of the Digital
Transition,” was held by the House Subcommittee on Telecommunications and the
Internet on March 10, 2005.
Congressional policymakers (particularly Representatives Barton and Upton of
the House Energy and Commerce Committee) have stated that there will be a stand-
alone DTV bill introduced during the first session of the 109th Congress. Such a bill
would address the December 31, 2006 deadline for reclaiming the analog spectrum.
Some observers have speculated that a DTV bill may include additional DTV-related
provisions (i.e. multicasting, broadcast flag, public interest obligations, etc.)
Appendix — Legislation in the 108th Congresses
Related to Digital Television
H.R. 426 (Sensenbrenner). TV Consumer Choice Act of 2003. Prohibits the
FCC from requiring digital tuners in television receivers. Introduced February 3,
2003; referred to Committee on Energy and Commerce.
H.R. 1396 (Markey). Spectrum Commons and Digital Dividends Act of 2003.
Requires FCC to ensure that any rules necessary to effectuate the timely transition to
digital television are promulgated and completed prior to making available the bands
of frequencies at 747-762 and 777-792 MHz for advanced commercial mobile
services or other competitive wireless services. Also provides increased funding to
assist digital conversion of public television stations. Introduced March 20, 2003;
referred to Committee on Energy & Commerce.
H.R. 1425 (Harmon). Homeland Emergency Operations Response Act.
Prohibits any delay in reassigning 24 MHz in the upper 700 MHz band (currently
occupied by television broadcasters) for public safety purposes, and requires those
frequencies to be operational by January 1, 2007. Introduced March 23, 2003;
referred to Committee on Energy & Commerce.
H.R. 1626 (Peterson). Local Voices on TV Act of 2003. Provides cable
carriage rights for qualified class A television stations. Introduced April 3, 2003;
referred to Committee on Energy & Commerce.
H.R. 2825 (Terry). Consumer Access to Digital Television Enhancement Act
of 2003. Requires the FCC to adopt and implement the MOU between the cable and
consumer electronics industries regarding a cable/DTV interoperability standard.
Also requires all television receivers marketed or labeled as “digital cable ready” to
come equipped with the capability to receive over-the-air digital broadcast signals,
and establishes minimum required power levels for digital broadcasts. Introduced
July 23, 2003; referred to Committee on Energy & Commerce.
H.R. 4501 (Upton). Satellite Home Viewer Extension and Reauthorization Act
of 2004. Requires the FCC to initiate an inquiry into setting a distant network
standard for digital television. Introduced June 3, 2004; referred to Committee on

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Energy and Commerce. Reported by Committee (H.Rept. 108-634) July 22, 2004.
H.R. 4518 (Smith, L). W.J. (Billy) Tauzin Satellite Television Act of 2004.
Requires the FCC to initiate an inquiry into setting a distant network standard for
digital television. Introduced June 4, 2004; referred to Committee on Judiciary.
Reported by Committee (H.Rept. 108-660) September 7, 2004. Passed by House
October 6, 2004.
H.R. 5024 (Pelosi). 9/11 Commission Recommendations Implementation Act
of 2004. Prohibits any delay in reassigning 24 MHz in the upper 700 MHz band
(currently occupied by television broadcasters) for public safety purposes, and
requires those frequencies to be operational by January 1, 2007. Introduced
September 8, 2004; referred to multiple committees.
H.R. 5040 (Shays). 9/11 Commission Report Implementation Act of 2004.
Prohibits any delay in reassigning 24 MHz in the upper 700 MHz band (currently
occupied by television broadcasters) for public safety purposes, and requires those
frequencies to be operational by January 1, 2007. Introduced September 9, 2004;
referred to multiple committees.
S. 1264 (McCain). FCC Reauthorization Act of 2003. Directs the FCC to
initiate a rulemaking to authorize the operation of digital television translators and
digital on-channel repeaters. Introduced June 13, 2003; referred to Committee on
Commerce, Science and Transportation. Reported by Committee (S.Rept. 108-140)
September 3, 2003.
S. 1621 (Brownback). Consumers, Schools, and Libraries Digital Rights
Management Awareness Act of 2003. Prohibits the FCC from mandating particular
content protection technologies in its regulation on Digital Broadcast Content
Protection; rather the FCC will establish objective standards and allow manufacturer
self-certification to meet those standards. Introduced September 16, 2003; referred
to Committee on Commerce, Science and Transportation.
S. 2644 (Ensign). Satellite Home Viewer Extension and Rural Consumer
Access to Digital Television Act of 2004. Requires the FCC to set a distant network
standard for digital TV, and requires that satellite carriers discontinue distant digital
signals once a subscriber can receive a terrestrial digital signal. Introduced July 14,
2004; referred to Committee on Commerce, Science and Transportation. On July 22,
2004, ordered to be reported with an amendment in the nature of a substitute
favorably.
S. 2774 (McCain). 9/11 Commission Report Implementation Act of 2004.
Prohibits any delay in reassigning 24 MHz in the upper 700 MHz band (currently
occupied by television broadcasters) for public safety purposes, and requires those
frequencies to be operational by January 1, 2007. Introduced September 7, 2004;
placed on Senate legislative calendar under General Orders, September 8, 2004.
S. 2820 (McCain). Spectrum Availability for emergency Response and Law
Enforcement to Improve Vital Emergency Services Act (SAVE LIVES Act).
Designates digital transition date as December 31, 2008, and establishes a fund to

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subsidize primarily low-income consumers for the purchase of digital-to-analog
converter boxes and other technologies in order that they may continue to receive
over-the-air broadcasts after the transition. Introduced September 21, 2004; referred
to Committee on Commerce, Science and Transportation. Amended in Committee
on September 22, 2004 to limit transition date only to public safety spectrum.
S. 2845 (Collins). National Intelligence Reform Act of 2004. Burns
amendment (No. 3773, adopted September 29, 2004) requires return of public safety
spectrum by December 31, 2007 under certain conditions as determined by the FCC.
Introduced September 23, 2004; measure laid before Senate by unanimous consent.
Passed by Senate with amendments, October 6, 2004. Passed House as amended,
October 16, 2004. Conference report (H.Rept. 108-796) agreed to by House and
Senate on December 7 and 8, respectively. P.L. 108-458 signed by President
December 17, 2004.

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