Analog Television Dies With a Whimper

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On June 12th, a potential cataclysm passed quietly into the ether. All U.S. analog TV stations were turned off. Despite fears on Capitol Hill and at the Federal Communications Commission that millions of hysterical Aunt Minnies would go screaming into the streets to protest the disappearance of Wheel of Fortune, nary a peep was heard. The widely feared non-event inspired fond recollections of Y2K, and Madonna's last movie.

The dirty little secret is that over-the-air television is so 1958. Americans long ago elected to ante up $50 a month or more to escape "free TV." More than ninety percent of the television viewing audience made their transition to digital cable and digital satellite, without public policy fuss or muss, in the 1990s.

But no victory in Washington is too small to go unclaimed. In the "digital TV transition," House Finance and Telecommunications Subcommittee Chairman Ed Markey (D-MA) felt obliged to step forward for a curtain call.

After my hearing in October of 1987, the FCC created the Advisory Committee on Advanced Television Service to investigate how the U.S. would create High Definition TV, but the panel initially pursued an ‘analog' standard for the nation. When researchers.... suggested the real possibility of achieving a digital standard for HDTV, I aggressively advocated for such a switch and successfully convinced the FCC in 1990 to begin pursuing a digital standard. This was a game-changing moment.

The June 11 press release neglects this material fact: Markey's 1987 hearings were the successful outcome of a campaign waged by TV station lobbyists. Their scheme aimed to block the release of unused TV band spectrum to valuable new services. That policy - ready to go in July 1987 - would have infused new cellular competition and enhanced public safety radio systems. Instead, massive bandwidth was wasted for over two decades, costing consumers over $100 billion while stunting the development of 3G broadband networks.

The 1987 plan that Rep. Markey touts was the broadcasters' gambit. And the public spin Congress gave it? Recapturing consumer electronic manufacturing jobs. At the hearings Markey cites, neither he nor anyone else talked about "digital television." Instead, Markey focused like a laser on employment:

It's going to be jobs, plants closing, people out of work, and a large debate, and either we put the Government and labor and the electronics industry and the university together today, and we put together a policy and we understand what our strategy is, or we are going to go down the same road that we have gone with automobiles and VCR's and every other consumer product.

His stated concern was that Japan had stolen the high-tech manufacturing sector from the U.S., and his solution (and the National Association of Broadcasters') was to freeze spectrum in place, reserving it for a new generation of TV sets that would pull production back to the U.S. The argument was comical even then - Congress received its "high definition" demo via an HD Sony television.

Today, of course, there is no U.S. TV industry. Indeed, there is no TV set industry anywhere else. "Flat panel display" (FPD) production - which includes TVs, cellular phones, computers, camcorders, and other devices - has superseded it. This is the nasty sort of unknown that has a way of destroying government planning. Moreover, neither the U.S. nor Japan is a major producer. As of 1993, Japan hosted 95% of FPD output; by 2005, just 10%. South Korea and Taiwan were both up to 40%, with China at about 7%. If the policy of 1987 were the victory Cong. Markey claims, Korean and Taiwanese workers should thank him personally. U.S. workers, conversely, made their last flat panel display in 1999.

Thanks to free trade, Americans are able to buy their big screen HDTVs from the most efficient suppliers. Households with cable or satellite - where the vast majority of high-definition programs are shown - can kick back and enjoy. That has little to do with the government's digital TV transition.

But the real policy failure is not yet behind us. Congress was so terrified by the loss of off-air broadcasts that it poured $2.1 billion into subsidies for digital set top boxes, bribing folks to keep watching off-air TV. Regulators claim that these subsidies were the key to success. Yet, half of the government's $40 digital box vouchers (limit: two per household) weren't even cashed. They were either lost or kept as souvenirs.

They make excellent keepsakes as icons of U.S. spectrum allocation policy. Gluing viewers to off-air TV and keeping massive bandwidth tied up in an obsolete technology robs Americans of countless wireless opportunities. Instead of moving broadcasts to broadband, cable and satellite to make room for innovative new services, we paid viewers to keep tuning in the same channels where I Love Lucy debuted in 1951.

TV airwaves would fetch $120 billion at the prices paid for wireless licenses in March 2008. The value of that bandwidth to consumers by is at least an order of magnitude higher. We will tap virtually none of this value through an FCC plan, launched Dec. 2002, designed to allow government-approved radios not yet invented to quietly use some TV band frequencies - so long as they don't come close to interfering with Aunt Minnie's Wheel of Fortune reception. These airwave scraps are needlessly sliced, diced, and pared: Aunt Minnie is watching cable.

Alternatively, a wireless cornucopia would be unleashed by an idea put forward by former Sen. Larry Pressler (R-S.D.) in 1996. (He was promptly targeted by broadcasters and defeated for re-election - a good endorsement, as these things go.) The Pressler plan would leave digital TV broadcasts in place, but give new licensees the right to buy the broadcasters out. This would pave the way for new services with wide stretches of virgin spectrum. This bandwidth mother lode would entice hot new mobile broadband applications. Concerned about the U.S. falling behind in Internet infrastructure? Circle this policy on your program guide.

But rest assured: it will garner little support in Washington. There, the search for 22-year "technology transitions" is alive and well, and the various players are bumping into each other taking credit for the one just concluded.


Hazlett is Professor of Law & Economics at George Mason University, and formerly served as Chief Economist of the Federal Communications Commission.

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