The FCC Digital Television Standards Decision: A short response

Having followed the Inquiry since its inception, I believe that the
Commission, in its Fourth Report and Order of 24 December 1996, has made
a most unfortunate decision -- one that will delay the development of a
viable digital TV broadcasting service and that may well result in sub-
stantial monetary losses to everyone involved, not least the viewers who
buy digital receivers in the absence of fully delineated broadcasting
standards. Of course, I may be wrong about this; perhaps Adam Smith's
Invisible Hand can not only adjust supply and demand in the marketplace
but also knows how to establish good scanning formats, something the
Commission itself has chosen not to do! Only time will tell if the
market really has this remarkable ability.

The DTV decision is the first major overhaul of TV broadcasting
standards in 46 years. The Commission had the rare opportunity to
authorize a system with much higher technical quality and much more
efficient use of very scarce spectrum. The process to accomplish these
goals has been underway since 1987. Evidently in the interest of getting
started without further delay and without major objections from the
interested industries, the FCC has compromised both these goals to the
extent that the move to digital broadcasting may well fail for lack of a
market. Even if it succeeds in the marketplace, there is a strong
likelihood that it will be found impossible to improve the system over
time, for example by eventually moving to progressive scan.

A key element in the Commission's strategy has been to turn off analog
(NTSC) broadcasting after 10 or 15 years. The purpose of this laudable
idea was to provide more viewer choice than is now available using less
spectrum, and to use the eventually released spectrum for new services.
The assumption was that there would be a rapid proliferation of digital
receivers. This would have been difficult enough to achieve with the
high receiver costs under the Grand Alliance propo- sal occasioned by
its many different scanning formats and by the need for a full HDTV
decoder in every receiver, even the cheapest. Rapid proliferation will
now be even more difficult to achieve with the uncertainty introduced
into the standard by failure to specify which scanning formats will be
used.

In a similar situation, the Commission previously declined to set
standards for satellite broadcast- ing, as a result of which there are
now at least three mutually incompatible systems in use. Hardware bought
for one service cannot be used on the other services, and none will be
useable with any version of the DTV standard just issued. There is
nothing in the FCC decision to prevent a similar situation from
developing in over-the-air broadcasting, either with respect to
transmission standards or to receiver capabilities.

There are now about 200 million NTSC sets in service in the US as well
as 60 million or more NTSC VCR's. To make it politically possible to
abandon NTSC broadcasting, which will make all of this equipment
useless, a mass market for digital receivers must develop very rapidly.
Without such a mass market, the turn-off of NTSC broadcasting will be
delayed, and perhaps made impossible. The higher spectrum efficiency
that is potentially available with digital broad- casting is now the
main public-interest motivation for making any change at all in the
broadcast- ing system. If NTSC cannot be turned off, this advantage will
not be achieved and the promised new services will never materialize.

With respect to the "apparent violation of the spirit, if not the
letter, of the Federal Advisory Com- mittee Act," that I cited in one of
my submissions, I am astonished at the weakness of the Commission's
response. The case for a violation of the letter of the law is evidently
stronger than I had thought. (The FCC Order does not even address
possible violation of the spirit, i.e. the intention, of FACA.) The FCC
maintains that it did not "establish" or "utilize" the group of TV and
computer-industry representatives who produced the "Agreement" of 25
November 1996. In fact, the group met at the urging of Commr. Ness, who
actually named the initial members in her letter of 24 October 1996. The
Agreement was incorporated into and is a vital part of the Fourth Order,
which was delayed until the Agreement was reached. The December 31
deadline of the Agreement was also accepted, as the Commission adopted
the Fourth Order on Christmas Eve, when one would have expected most
members to be home with their families.

FACA applies if the advice of the group is "utilized," even if the group
is not "established" by the Agency involved. In this case, the Fourth
Order ignores the fact that Commr. Ness's letter was instrumental in
forming the group and in setting its agenda and date for completion. The
resulting Agreement was incorporated into the Fourth Order without
change, in spite of the fact that it differs substantially from the
earlier-stated views of most of the commissioners. Although I am not a
lawyer, I spend a lot of time with lawyers, whose average intelligence I
hold in high regard. In the interpretation of language in statutes, I
believe that the plain meaning of the words is the first place to look
for the import of a law. If the actual incorporation of the Agreement
into the Order is not "utilization," then English is not my mother
tongue.

After Mrs. Clinton was exonerated in spite of her egregious (and more
destructive) evasion of FACA, I did not really expect that the
Commission would feel itself bound by the letter of the law. I did hope
that the members would pay some attention to the wisdom incorporated in
the Act, which is not a mere technicality. FACA is based on the premise
that public policy made in secret is likely to be bad policy. The secret
nature of the deliberations of the group, cited as evi- dence that the
group was not an FCC creation, makes the violation more serious, not
less. The fundamental deficiency of such secret deliberations is that
the public viewpoint is invariably unrepresented. A new television
broadcasting system will be paid for by the viewing public, directly or
indirectly, and the public had no input at all into the Agreement.

In Paragraph 30 of the Fourth Order, seven objectives for the DTV
standard are listed, four that were introduced with the Fifth NPRM and
three that have been a part of the Inquiry for some time. Except for the
minimization of regulation, the Commission does not even attempt to make
any argument that the Agreement advances any of these objectives. My
opinion is that the Agree- ment places all of these objectives in doubt.

(The continuation of free over-the-air TV is surely in the public
interest as defined by the Com- mission, even though not listed as a
specific objective. The Order, as it stands, says little about this
issue except to agree that any material at all, and not just audio and
video, may be transmitted in the new digital channels in the guise of
"data broadcasting." It is also "anticipated" that one free program be
transmitted in each 6-MHz channel. One hopes that this omission will be
corrected in subsequent orders.)

Unstated is what appears to be an important result of adopting the
Agreement: the signatories have agreed not to sue or otherwise object to
the implementation of the decision, including the assign- ment of the
second channels. While it is certainly desirable that lawsuits be
avoided and that the move to digital broadcasting get underway promptly,
these objectives must be weighed against the Commission's primary duty,
which is to make wise decisions that advance the public interest, even
if it takes a little more time and even if some companies, in their
perceived short-term interests, would prefer a different path.

In its Order, the Commission noted that most public-interest groups
opposed the Grand Alliance proposal, even in its original form in which
the scanning formats were spelled out. Presumably, they would have been
even less enthusiastic about the final result in which there is
substantial risk of damage to the public interest. The lesson of Mrs.
Clinton's experience has been ignored. If the health-care task force had
met in public and represented all interested parties, we might well have
had a politically acceptable result. The private meetings caused a great
deal of resentment and did not produce a broad consensus, so the entire
effort went for nothing. In the digital televi- sion case, this failure
to take the public interest into account may well kill digital
broadcasting.

William F. Schreiber 7 January 1997 wfs@mit.edu 617 253 2579

Anything herein may be used with or without attribution. This paper,
which is a summary of a projected longer piece, represents the author's
opinion only. He is not in the pay of any entity with a financial
interest in the subject matter. For a paper copy or for copies of
earlier submissions in this Inquiry, send a request to
dmanning@image.mit.edu