The Digital TV Transition: A Brief Overview

Order Code RS22217

Updated February 15, 2006

CRS Report for Congress

Received through the CRS Web

The Digital TV Transition: A Brief Overview

name redacted

Specialist in Science and Technology

Resources, Science, and Industry Division

name redacted

Analyst in Telecommunications and Technology Policy

Resources, Science, and Industry Division

Summary

During the first session of the 109th Congress, policymakers sought to accelerate

the nation’s transition to digital television and to expedite the transfer of radio frequency

channels from the broadcast industry to public safety and commercial users no later than

2009. Broadcasters are holding spectrum in the 700 megahertz (MHZ) band (channels

52-69) that they would be required to relinquish after the transition to digital television

(DTV) is achieved. Without a hard deadline, the transition to digital television has been

postponed. Meanwhile, public safety officials want 700 MHZ spectrum that has been

assigned to them, but not delivered, in order to build new interoperable networks, while

the commercial wireless industry would like access to the spectrum for new services.

Legislative language to clear spectrum and facilitate the transition to digital

televison was included in both the House and Senate FY2005 budget reconciliation bills

(H.R. 4241/S. 1932). The final version of the Deficit Reduction Act of 2005 (P.L. 109171) sets the digital transition deadline at February 17, 2009, and allocates up to $1.5

billion for a digital-to-analog converter box program. P.L. 109-171 does not include

provisions on “downconversion,” nor does it address the debate over expanding "must

carry" rules to include multicasting must carry. The enacted legislation also does not

include provisions on the “broadcast flag.” This report will not be updated.

The transition to digital television has two major policy components. One set of

policy decisions is concerned with how best to move television broadcasters and their

viewers to digital technology. Other key policy issues deal with radio frequency spectrum

management and allocation. The public interest goals for these paths are not well aligned,

presenting Congress with difficult choices to achieve its overall objective of completing

the transition. Briefly discussed below are key points about the transition process:

background, the impact on broadcasting, spectrum policy, and recent legislative activity.1

1

Detailed information on these topics is available in CRS Report RL31260, Digital Televison:

(continued...)

Congressional Research Service ˜ The Library of Congress

CRS-2

I. Background. The process of regulating the introduction of digital television

(DTV) technology extends over more than a decade.

!

!

!

!

!

DTV is considered the most significant development in television

technology since color television because of features such as better

picture resolution and the more efficient use of spectrum. DTV also

allows a broadcaster to offer multiple programs (multicasting) or a single

program of high definition digital TV. The United States and countries

throughout the world are actively seeking to replace existing over-the-air

analog TV with DTV broadcasting.

The Telecommunications Act of 1996 (P.L. 104-104) provided that

eligibility for DTV licenses should be limited initially to existing

broadcasters. Digital signals cannot be transmitted with existing analog

television technology. Therefore, broadcasters were issued additional

licenses for new, DTV broadcast channels while continuing to broadcast

on existing channels during the transition period. The old, analog

licenses were to be returned to the federal government after the transition

to DTV.

In the Balanced Budget Act of 1997 (P.L. 105-33), Congress set a

deadline of December 31, 2006 to complete the transition from analog to

digital television but allowed several exceptions that can extend that

deadline. A critical exception is the percentage of households, by

market, that must be equipped to receive digital signals: 85% or more.

Given the slower-than-expected rate of adoption for DTV in American

homes, the goal of over-the-air digital television in 85% of American

households by 2006 was viewed as not likely to be reached. Legislative

language to clear spectrum and mandate the transition to digital televison

by a specific deadline (a “hard” date) was included in both the House and

Senate FY2005 budget reconciliation bills (H.R. 4241/S. 1932). The

House proposal was for a December 31, 2008, deadline; the Senate

specified April 7, 2009. The conference agreement on the S. 1932

(Deficit Reduction Act of 2005) sets a deadline of February 17, 2009.

Switching from analog to digital broadcast means that broadcasters will

begin to broadcast exclusively on channels assigned for digital use;

broadcasts in analog mode will be ended. Viewers with conventional (not

DTV) sets will lose over-the-air broadcast TV unless they either install

a set-top converter box to convert digital signals to analog formats, or

subscribe to a cable or satellite service that can accommodate both

technologies.

II. DTV and Broadcasting. Several studies, such as those mentioned below, have

attempted to estimate the number of over-the-air analog television households that will

require converter boxes after the digital transition takes place. Much of the debate over

1

(...continued)

An Overview, by Lennard Kruger; and CRS Report RL32622, Public Safety, Interoperability and

the Transition to Digital Television, by (name redacted).

CRS-3

the transition to DTV centers on how to assure continued access to over-the-air broadcast

programs.

!

!

!

!

According to the National Association of Broadcasters (NAB), there are

currently 280.5 million analog televisions in United States. Of these, 73

million rely on over-the-air broadcasting.2

A key issue in the digital transition is that the millions of analog

televisions that rely on over-the-air broadcasts will no longer work once

the analog signal is turned off. According to a Government

Accountability Office survey, 19% of U.S. households (21 million) do

not subscribe to a cable or satellite service and rely exclusively on overthe-air broadcasting. The GAO found that low-income, non-White, and

Hispanic households are more likely to rely on over-the-air television

broadcasting.3 The Federal Communications Commission (FCC)

estimates that 15% of TV households are exclusively over-the-air.4 The

Consumer Electronics Association (CEA) has estimated that less than

13% of TV households currently rely on over-the-air TV broadcasts.5

In June 2005, the Consumers Union and the Consumer Federation of

America issued a joint study6 that estimated that approximately 16

million households would lose all TV reception when analog signals are

cut off . Based on an estimate of a $50 price to purchase a converter box,

the report concluded that “the direct government-imposed costs on

consumers to preserve the usefulness of [analog television sets] would be

$3.5 billion or more.”

The GAO estimated that the cost of assuring over-the-air broadcasting by

supplying converter boxes to households that only have analog television

could total from $460 million to $10.6 billion, depending on a number of

variables such as the cost of the boxes and the number of households

2

Comments of the National Association of Broadcasters and the Association for Maximum

Service Television, Inc., In the Matter of Over-The-Air Broadcast Television Viewers, FCC, MB

Docket No. 04-210, August 11, 2004.

3

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://energycommerce.house.gov/108/Hearings/05262005hearing1533/Shapiro.pdf]. Viewed

July 7, 2005.

4

FCC, Annual Assessment of the Status of Competition in the Market for the Delivery of Video

Programming, Report FCC 05-13, MB Docket No. 04-227, released February 4, 2005.

5

Statement of Gary Shapiro, President and CEO, Consumer Electronics Association, before the

House Committee on Energy and Commerce, Subcommittee on Telecommunications and the

Internet, May 26, 2005.

Available at [http://energycommerce.house.gov/108

/Hearings/05262005hearing1533/Shapiro.pdf]. Viewed July 9, 2005.

6

Estimating Consumer Costs of a Federally-Mandated Digital TV Transition, Consumers Union

and Consumer Federation of America, June 29, 2005 at [http://www.hearusnow.org/fileadmin/

sitecontent/DTV_Survey_Report-Final_6-29-05.pdf]. Viewed August 10, 2005.

CRS-4

!

!

!

!

eligible to receive assistance.7 The GAO cost estimates do not include

the cost of implementing a subsidy program.

Policy issues included whether some form of financial assistance

(subsidies or tax credits, for example) should be provided by the federal

government to enable over-the-air households to purchase converter

boxes or digital televisions; whether such assistance should go to lowincome households exclusively or to all households; whether subsidies,

if warranted, should be financed by proceeds garnered by auctioning the

analog spectrum; how much funding a subsidy program would require,

and how much revenue is likely to be raised by auctioning the

commercial portion of the reclaimed analog spectrum.

Many cable households might wish to continue to use analog televisions

after the transition. Cable companies might offer converter boxes to

these customers. As an alternative, it is possible that cable providers

might seek authority from Congress to “downconvert” the digital signal

of selected local broadcast stations to analog format. To serve customers

with digital televisions, cable providers would continue to provide digital

signals as well (in other words, “dual carriage”). Under this scenario, a

key issue is whether (and how) Congress should mandate which local

broadcast stations would receive the benefit of “dual carriage” to cable

customers, and for how long.

A related issue is whether cable systems and satellite televison should be

required to carry all the programs of over-the-air broadcasters. The

simultaneous broadcasting of multiple channels of programming made

possible by digital technology is referred to as multicasting. The FCC

has ruled that it will not require what is usually referred to as

multicasting must carry.

NAB has announced that it accepts that there will be a hard date for

ending analog television broadcasts but it is pressing for multicasting

must carry, which NAB claims is a way of assuring quality and diverse

programming. Opponents claim that this requirement would clog cable

operators’ systems, closing out many other programs and discouraging

new entrants. There have also been expressions of concern that

multicasting must carry would accelerate media concentration and reduce

the diversity of viewpoints.8

III. Spectrum Policy. The completed transition process will free up 60 MHZ of

spectrum in addition to freeing spectrum already allocated for public safety or sold for

commercial use. Among the uses proposed for this 60 MHZ are: to provide additional

spectrum for public safety use; to assign spectrum for unlicensed use; and to auction

licenses for the channels.

!

7

8

In the Intelligence Reform and Terrorism Prevention Act (P.L. 108-458),

Congress expressed its sense that 1) it must act in the first session of the

109th Congress to establish a comprehensive approach to the timely

GAO-05-258T, pp. 14-15.

“DIGITAL TELEVISION: Diverse Groups Oppose ‘Must Carry’ Provisions,” by Drew Clark,

National Journal’s Technology Daily, PM Edition, October 17, 2005.

CRS-5

!

!

return of spectrum held by the broadcasters and that 2) any delay in doing

this would delay planning by the public safety sector that is to receive

some of the spectrum for new communications systems. (Section 7501.)

The act also requires the FCC to prepare a study for Congress evaluating

whether additional spectrum should be made available for public safety

and homeland security wireless communications. (Section 7502.)

Some of the channels to be vacated by broadcasters have been assigned

to public safety and some have been auctioned for advanced wireless

communications services. There is widespread interest in using the

remaining, unassigned channels for broadband wireless. Based on

actions approved to date by House and Senate committees, it appears that

all the unallocated spectrum (60 MHZ) would be auctioned in 2008.

Although estimates vary, spectrum auctions of frequencies in the 700

MHZ band have typically been projected to gross $20 billion to $30

billion.9 Revenue potential is dependent on a number of factors, including

timing of auctions and the date at which spectrum will be cleared and

available. The Congressional Budget Office reportedly set a benchmark

estimate of $10 billion in revenue from auction of this spectrum.10 On

December 20, 2005, CBO estimated auction proceeds at $12.5 billion.11

IV. Legislative Activity. Policymakers in the 109th Congress have allocated part

of 700 MHZ auction funds toward meeting a budget resolution to reduce the federal

deficit by the end of FY2010.12 The goal is to maximize the amount of 700 MHZ

spectrum available in a timely manner while minimizing the cost and inconvenience to

TV viewers and the television industry that might result from the transition. The Senate

passed the Deficit Reduction Omnibus Reconciliation Act of 2005 (S. 1932, Senator

Gregg) on November 3, 2005, which contains some provisions regarding DTV. The

House passed, on November 18, 2005, the Deficit Reduction Act of 2005 (H.R. 4241,

Representative Nussle), with more extensive provisions for DTV. The budget

reconciliation conference report on S. 1932 (H.Rept. 109-362) was approved by the House

on December 19, 2005, and approved by the Senate on December 21, 2005. However,

because the Senate removed three provisions from the conference report (provisions not

related to digital television), S. 1932 again had to be approved by the House before final

enactment. On February 1, 2006, the House again approved S. 1932. On February 8,

2006, the President signed the Deficit Reduction Act of 2005 into law (P.L. 109-171).

Highlights of Title III – Digital Television Transition and Public Safety – include:

9

“Analysis of an Accelerated Digital Television Transition,” prepared by the Analysis Group,

sponsored by Intel Corporation, May 31, 2005, page 6 at [http://www.itic.org/archives/

DTV%20Transition%20Report.pdf]. Viewed August 30, 2005.

10

As discussed at full committee markup, Committee on Commerce, Science and Transportation,

Senate, October 20, 2005.

11

CBO, Cost Estimate for H.R. 2863, DOD Appropriations Act, 2006, December 20, 2005, page

3 at [http://www.cbo.gov/ftpdocs/69xx/doc6990/hr2863.pdf]. Viewed December 23, 2005.

12

For the House Committee on Energy and Commerce, the commitment could be

$14,734,000,000 for fiscal years 2006 through 2010; H.Con.Res. 95, Concurrent Resolution on

the Budget for Fiscal Year 2006, Title II, Section 201 (a) (2) (C).

CRS-6

!

!

!

!

!

!

!

Setting a definite date of February 17, 2009, for the release of spectrum

at 700 MHZ13 currently held by broadcasters. By February 18, 2009, fullpower television broadcasters are required to cease their analog television

service and broadcast exclusively in a digital format. (Section 3002)

Requiring auctions by the Federal Communications Commission (FCC)

of the freed spectrum beginning on January 28, 2008, and ending on June

30, 2008. (Section 3003)

Requiring that auction proceeds will be deposited in a fund in the U.S.

Treasury called the Digital Television Transition and Public Safety Fund.

On September 30, 2009, $7.363 billion will be transferred from the

Digital Television Transition and Public Safety Fund to the general fund

of the Treasury. (Section 3004)

Creating a fund to receive a portion of spectrum auction revenue to cover

some of the costs to consumers of conversion to digital TV. Up to $990

million will be made available to the National Telecommunications and

Information Administration (NTIA) to administer a digital-to-analog

converter box program. Between January 1, 2008, and March 31, 2009,

the program will supply up to two coupons per requesting household

worth $40 each towards the purchase of converter boxes. The program

may receive additional funding bringing the total up to $1.5 billion if

NTIA notifies Congress that additional funding is needed. (Section 3005)

Designating other uses of auction proceeds not to exceed: $1 billion for

public safety interoperable communications, $30 million for New York

City 9/11 digital transition, $75 million to assist low-power television

stations during the digital transition, $156 million for a national alert and

tsunami warning program, $43.5 million to implement the ENHANCE

911 Act of 2004, $30 million for the essential air service program

administered by the Department of Transportation. (Sections 3006-3012)

Continuing the FCC’s authority to hold auctions, which expires in 2007.

Auction authority is extended through 2011. (Section 3003)

Providing for additional supplemental license fees to be assessed by the

FCC in the aggregate amount of $10 million during FY2006. (Section

3014)

P.L. 109-171 did not retain the provisions in the House bill on digital-to-analog

conversion and must carry (the “downconversion” issue), nor were the House provisions

on a comprehensive consumer outreach program retained. Also, like the previous House

and Senate versions, the conference agreement does not contain language addressing the

multicast must-carry issue or other DTV issues such as the broadcast flag or DTV public

interest obligations.

13

Wireless (radio frequency) spectrum is measured in cycles per second, or hertz (Hz). Standard

abbreviations for measuring frequencies include kHz — kilohertz or thousands of hertz; MHz —

megahertz, or millions of hertz; and GHz — gigahertz, or billions of hertz.

EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the

Library of Congress, charged with providing the United States Congress non-partisan advice on

issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The

reports are not classified, and Members of Congress routinely make individual reports available to

the public.

Prior to our republication, we redacted names, phone numbers and email addresses of analysts

who produced the reports. We also added this page to the report. We have not intentionally made

any other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in

the United States. Any CRS report may be reproduced and distributed in its entirety without

permission from CRS. However, as a CRS report may include copyrighted images or material from a

third party, you may need to obtain permission of the copyright holder if you wish to copy or

otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public

understanding of information that has been provided by CRS to members of Congress in

connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim

copyright on any CRS report we have republished.