Digital Television: A Private Sector Perspective on the Transition

Subcommittee on Telecommunications and the Internet
March 15, 2001
10:00 AM
2123 Rayburn House Office Building 

Mr. David Arland
Director of Government & Public Relations, America
Thomson Multimedia
10330 North Meridian Street
Indianapolis, IN, -

Introduction

Thank you, Chairman Upton, Ranking Member Markey and Members of the Subcommittee for the opportunity to testify today on issues affecting the transition to digital television ("DTV").  My name is Dave Arland, and I am the Director of Government Relations for Thomson Multimedia, Inc.  I am testifying today not only on behalf of Thomson, but also the Consumer Electronics Association (CEA).  CEA represents more than 600 U.S. companies involved in the development, manufacturing and distribution of audio, video, mobile electronics, communications, information technology, multimedia and accessory products.  Its member companies, which include Thomson, account for more than $60 billion in annual sales. 

Thomson, which is best known as a manufacturer and marketer of RCA, PROSCAN and GE brand names, is the leading television and digital satellite receiver manufacturer and marketer in the United States, each year selling more than 5 million televisions and 3 million digital satellite receivers.  One out of nearly every five television sets sold in the United States is a Thomson product.  Headquartered in Indianapolis, Indiana, Thomson employs more than 7,000 Americans working in facilities across the nation.  Thomson helped develop the U.S. digital television system and has been a leader in the field of DTV innovation for more than a decade.

The State Of The DTV Transition Today: Building Momentum

Thomson and CEA greatly appreciate the Subcommittee's continuing oversight of the transition to advanced television services, reflected in today's hearing.  This Subcommittee, under both Republican and Democratic leadership, going back to the first HDTV hearing chaired by Congressman Markey in September, 1987, has played a key role at several critical junctures in the evolution of digital television services.  This Subcommittee has helped to galvanize industry to do the cooperative work necessary to bring the benefits of DTV to American consumers, has prodded the FCC to provide regulatory stimulus when necessary, and has formulated legislation to accelerate and facilitate the deployment of DTV services. 

Today, we stand at yet another pivotal point in the progression toward deployment of DTV services to all Americans at a price they can afford.  In Thomson's view, the DTV transition is progressing better than some critics contend but not as well as many had hoped.  The testimony which this Subcommittee will receive today from almost every witness will contain some good news about what that industry segment is doing to speed the DTV transition together with an array of concerns about others not doing enough. 

There are two fundamental realities about the DTV transition.  The first is that the science of digital television is revolutionary, the technical challenges in making all of this work with an open yet interconnected system, as opposed to a closed system, are daunting, and technical breakthroughs cannot be decreed by government fiat to occur by a date certain.  The science of digital television requires time and patience.  As this Subcommittee considers how to facilitate the DTV transition, it also needs to understand the technical difficulty of the enterprise, the hundreds of millions of dollars invested by industry to reach where we are today, and the genuine progress we have made to date.

The second reality is that the business aspects of the DTV transition are almost as complex as the science and, arguably, more difficult to resolve.  The science of digital video offers enormous potential market opportunities to industries which compete fiercely with each other and to companies competing vigorously for market shares within industries.  Yet, the technology is so new and is still evolving that many of the corporate stakeholders can see only the vague outlines of viable business plans.  The vastness of the business opportunity combined with the uncertainty about particular business applications makes the inter-industry struggle for control of key elements of the DTV infrastructure and technology all the more intense. 

While there remain some technical obstacles to a successful completion of the DTV transition, the more difficult obstacles are business related.  The remainder of this testimony describes the range and costs of DTV products available to consumers today, endeavors to identify remaining obstacles to a successful DTV transition, and offers some solutions to overcome them. 

Manufacturers Are Providing Consumers With a Growing Array of DTV Products at Rapidly Decreasing Prices

1.                  Sales of DTV Products Exceed Many Previously Successful Consumer Electronics Products At A Comparable Time In Their Product Launch

The transition to digital television, from the perspective of DTV manufacturers, is building momentum.  Last year, sales of DTV products - including DTV receivers, high resolution displays and set-top converter boxes - reached more than 684,500 units and accounted for $1.4 billion in consumer investment.  This year, CEA estimates sales of DTV receivers and displays will increase as much as 80 percent - to 1.125 million units - with consumer investment climbing to $2.1 billion.

The successful introduction of DTV products is exceeding initial industry projections.  It compares quite favorably with the introduction of other popular consumer electronics products.  In fact, annual growth in both unit and dollar sales for DTV products during the first four years on the market is projected to surpass that of computers, VCRs, CD players, and color TVs.

A broad array of products is being offered to consumers.  To date, more than two dozen manufacturers have introduced over 200 different DTV products, which are carried in thousands of retail outlets nationwide.  Indeed, the diversity of DTV products currently available offers consumers an extraordinary degree of flexibility when choosing - and I stress the word choosing - how they will make the transition to DTV, both in terms of functionality and cost - 

Ø      The sports fan who wants the unparalleled experience of viewing the Super Bowl or the NCAA Final Four in HD can choose from among a number of fully integrated, wide-screen HDTV receivers of various screen sizes and designs. 

Ø      The parent or educator who desires access, using an existing analog receiver, to unique educational and children's DTV programming, can choose from a variety of digital set-top converter boxes. 

Ø      And finally, the consumer who believes DTV program offerings are not sufficient in number and/or quality to merit the purchase of an integrated DTV receiver at this time, but who, as an interim step, wants to enhance their enjoyment of abundant DVD content, may choose from among many different models of high resolution displays that can be upgraded later to receive DTV.

The ability of consumers - not the government, not broadcasters, but consumers - to choose for themselves how, when, and at what cost, they will make the transition to DTV is an essential ingredient to consumer acceptance of DTV and ultimately the success of the transition.

2.                  DTV Prices Are Falling Rapidly

Another essential ingredient to DTV's acceptance by consumers, as everyone knows, is the need to drive DTV product prices down as quickly as possible.  I am pleased to report that on this front, manufacturers are succeeding - DTV prices are coming down, and they're coming down fast.  Over the last two years alone, some DTV receiver and display prices have plummeted by nearly fifty percent.  Consistent with the pace of DTV product sales, the decline in retail prices of DTV receivers is in line with the affordability curve for DVD players, and much more rapid than the similar curve for products like CD players, VCRs and large screen analog TVs.  Prices for DTV set-top boxes also are falling, and CEA expects a strong upsurge in sales of these devices now that broadcasters and the FCC have finally reaffirmed their support of the 8VSB DTV transmission standard, a very important development in the DTV transition spurred, in part, by this Subcommittee's July 25, 2000 oversight hearing.

 I am very proud to say that in terms of both DTV product variety and cost reduction, Thomson is a leader.  Thomson's Year 2001 DTV product line includes:

Ø      The Lowest Price DTV Receiver/Converter Box.  The DTC100 set-top converter box, priced at $549, is the lowest price and, with digital satellite capability, the most fully featured DTV receiver/converter currently available;

Ø      A Variety of HDTV Monitor Displays.  Thomson's direct-view and projection high-resolution HDTV monitors range in size from 27" and 61" screen sizes, and include the RCA 42", 3½-inch deep, wall-mountable plasma monitor;

Ø      Fully Integrated HDTV Sets.  Thomson offers direct-view and projection fully-integrated HDTV sets in three screen sizes, 38", 61" and 65"; and

Ø      The Innovative "Liquid Crystal On Silicon" HDTV.  Finally, one of the most exciting new innovations in HDTV display technology, RCA's Liquid Crystal on Silicon ("LCOS") HDTV.  The LCOS, which represents a $25 million investment by Thomson, will be available later this year and features a flat, 50-inch, wide-screen display; weighs only 100 pounds, and, with a depth of only 18-inches, makes having HDTV in the family room something even my wife would agree to.

And to give the Members of this Subcommittee an idea of how quickly manufacturers are working to improve affordability of digital television products, Thomson is pleased to announce today that - effective on the first of next month - consumers will be able to find the widescreen, fully integrated with over-the-air and satellite electronics, 38" RCA HDTV for $2,999. 

This marks a 21% reduction in consumer prices, since this product was first introduced last fall. 

We are also bringing down the prices of widescreen, fully-integrated, RCA HDTV projection sets out of the stratosphere.  The pricing on our 61" model will drop from a high of nearly $8,000 two years ago to $3,999 by April. 

Consumers interested in HDTV Monitor products will find similar savings - with a 32" RCA HDTV monitor available for $1,599.

This aggressive, affordable pricing is being driven by three factors:  first, growing consumer demand for better displays; second, the natural competitive pressures of the consumer electronics industry; and third, the explosion of crisp digital video now available on disc and via satellite.  More over-the-air programming from America's traditional TV programmers will only do more to fuel the transition. 

All of this shows that consumer electronics manufacturers are investing in the innovation and cost reduction efforts necessary to ensure consumers have access to a broad array of increasingly affordable DTV products, and that prices for these products move downward as swiftly as possible to true mass-market levels.  The very same marketplace forces operating in our intensely competitive consumer electronics industry that lowered prices so dramatically for VCRs, CD players and analog television sets will benefit consumers in the DTV products area.  We are, in the words of Chairman Tauzin, more than keeping our end of the DTV "deal."

3.                  The Availability of Digital-Ready Displays Will Likely Hasten, Not Delay, Consumers' Transition to DTV. 

There is a matter that continues to drive, needlessly, we believe, a wedge between broadcasters and consumer electronics manufacturers and that this Committee will likely hear of today.  Broadcasters have been critical of manufacturers' flexible approach to DTV products, specifically with regard to the availability of high resolution displays that do not have built in DTV reception capability.  They point to the entirety of DTV products that are available and lament that only a small percentage, less than 20 percent, can actually receive a digital television signal. 

While it can be stipulated that broadcasters have this one number right, the conclusions they draw are wrong.  They reveal not only a basic misunderstanding of what is needed to drive consumers to purchase DTV receivers, but also a failure to recognize what could be an opportunity to encourage more rapid consumer conversion to DTV receiver technology.

As I have already noted, in response to strong consumer demand, manufacturers are making available a wide array of DTV products, including many digital-ready displays.  But the question should not be, "why are manufacturers making DTV-ready displays?"  That's easy: we are responding to consumer and retail customer demand.  Rather, the question that should be asked by broadcasters is, "why is consumer demand for digital-ready displays disproportionately greater than it is for DTV receivers or far less expensive DTV converter boxes?" 

The answer is simple:  readily available content. 

Consumers purchasing HDTV monitors know that when they bring their monitor home they can immediately begin to enjoy the display's higher quality picture through abundant amounts of programming available on DVD.  In fact, it does not take a great leap of logic to predict that consumers who are willing to purchase a high-end digital display just to enjoy the better picture quality afforded by DVDs, will be the same consumers who will seek to add a DTV tuner device to their display device to receive the best picture quality once greater amounts of HDTV are available.  In short, we believe broadcasters should take some measure of comfort in knowing that consumers who otherwise may not buy any DTV device are at least taking the first step by purchasing an HDTV monitor that is capable of what will likely be a significantly more affordable upgrade to full DTV reception capability when broadcasters begin to provide digital programming in sufficient quality and quantity to drive consumer purchases of DTV set-top receivers. 

There Are Significant Remaining Issues Affecting the DTV Transition That Warrant the Attention And Action Of Congress And The FCC

While the consumer electronics industry is optimistic about the prospects for making digital television an increasingly affordable part of American consumer life, significant obstacles to a full and more rapid transition still exist and require Congress's and the FCC's immediate attention.  The consumer electronics industry urges Congress to address these issues in a comprehensive manner that enables the work of all DTV stakeholders to move forward as quickly and as smoothly as possible.

A Greater Amount of Unique, High Quality DTV Programming, Particularly HDTV, Is Urgently Needed to Drive Consumer Demand for DTV

The importance of abundant, unique, and high quality digital content to the success of the transition cannot be overstated.  It is truly this simple: consumer demand for DTV receiver products will never reach mass market levels if there is not enough desirable digital programming to watch.  Today, notwithstanding the efforts of a few, we are far from having enough desirable digital content to view.

That is not to say there is no good news on programming - there is.  As demonstrated earlier, CBS is carrying substantial prime time and special events HDTV programming this year, including the Super Bowl and the NCAA Basketball Championships.[1]  Public broadcasters also are taking full advantage of what DTV has to offer, including specialized HDTV programming and multiple streams of educational and civic SDTV programming.  CBS and America's public broadcasters clearly "get it":  high quality DTV programming draws in viewers. And CBS's experience is proof that HDTV-centric business plans can also be money making - not money losing.

There is also an increasing amount of HDTV programming offered by non-broadcast sources.[2]  Satellite providers DIRECTV and the Dish Network each are providing HDTV programming to consumers nationwide; and, in one of the transition's more ironic twists, cable networks are becoming an increasingly large provider of HDTV programming.  In fact, the HBO, Showtime and MSG cable networks are offering more HDTV programming than all of the broadcast networks combined.[3]

The bad news, unfortunately, is that, in terms of unique and high quality DTV programming provided free, over-the-air, what you have seen today from CBS and the public broadcasters, with the exception of several local broadcast pioneers (including Capitol Broadcasting's WRAL), is almost all you can expect to get.

Of course, as broadcasters are quick to point out, many broadcasters are transmitting a digital signal.  However, very few are transmitting any meaningful amount of unique or high quality digital programming on that signal.  Instead, much of the programming transmitted on the digital channel is merely an upconverted version of their analog offering, offering consumers a viewing experience no better than the original analog programming. 

The shortage of free, over-the-air HDTV programming threatens to significantly dampen consumer interest and investment in DTV, slow DTV equipment penetration and delay the reclamation of broadcasters' analog spectrum. 

As Chairman Tauzin reminded broadcasters last July, while the law permits broadcasters to use their digital spectrum for data and other ancillary and supplementary services, the availability of free, over-the-air HDTV programming is absolutely "part of the deal."  It is time for broadcasters to follow the lead of CBS, public broadcasters, and their pay TV rivals and recommit themselves to offering Americans abundant amounts of HDTV and other unique, quality DTV programming services.

Finally, it is important to note the importance of cable carriage of DTV broadcast signals to the development of high quality DTV programming.[4]  While CEA's members, including Thomson, believe that the FCC's recent ruling requiring cable operators retransmitting signals pursuant to "must carry" to carry broadcasters' HDTV signals in HDTV (and not downconvert to lesser definition),[5] is consistent with the Congress' view of the HDTV compact between broadcasters and the American public and will help push the DTV transition forward, we are very concerned about the negative impact on digital programming development of the Commission's so-called "primary video" ruling.  That is a step backward.

As Members of the Subcommittee are aware, the FCC, in its recent Digital Must Carry First Report and Order, adopted rules requiring cable operators to carry only one of a broadcaster's multiple DTV programming streams, rather than requiring carriage of all DTV programming streams that are provided free, over-the-air.[6]  We believe this decision, which was adopted by a divided and reluctant Commission, stands as a serious obstacle to the development and availability of abundant, unique DTV programming.  Virtually all broadcasters committed to the digital transition contemplate some mix of HDTV and multicasting.  The Commission's decision undercuts the multicasting prong of the DTV programming equation.  Particularly hard hit are public broadcasters, whose DTV plans, as the preceeding demo clearly shows, rely very heavily on their ability to provide, over-the-air and via cable, multiple, unique DTV program offerings and who, by law, are precluded from entering into retransmission consent agreements with cable operators.  We urge Congress either to make clear to the FCC that the Commission's construction of the statute was flawed and multicasting can fall safely within a digital must carry regime or, if necessary, amend the law to require cable carriage of the multicast programming streams contained in a digital broadcaster's signal to foster a rich array of programming choices needed to drive and satisfy consumer interest in DTV.

Rapid Adoption of Final Standards Enabling Cable-DTV Compatibility Is Essential to Drive DTV Equipment Penetration in America's 70 Million Cable Households

If there is to be any chance of achieving meaningful penetration of DTV in the 70 percent of American households that subscribe to cable, cable consumers must first be assured that: (1) the DTV receiver they purchase will function properly when receiving DTV signals over cable; and (2) they will be able to exploit and enjoy all of the DTV services, including interactive services, that broadcasters provide on the digital channel.  Unless both of these requirements are met, the DTV transition will not be successful.  DTV receiver penetration in cable households will remain extremely low, and certainly not sufficient to satisfy the DTV receiver penetration requirements triggering broadcasters' return of their analog spectrum.

The consumer electronics industry, under the leadership of CEA and working with the National Cable Television Association ("NCTA") and other cable entities, has devoted substantial time and resources to resolving the outstanding technical and business issues needed to enable complete DTV-cable compatibility.  Most recently, CEA and NCTA have been working to implement a set of agreements reached in February 2000.  These agreements consisted of technical agreements on standards: (1) to allow for direct connection of digital television receivers to cable systems, which would eliminate the need for the consumer to use a set-top box; and (2) addressing cable carriage of so-called PSIP (Program System and Information Protocol) data, which is critical to the tuning and identification of DTV programming by a DTV receiver.  In addition, building on the negotiations between the consumer electronics and cable industries, the FCC has adopted rules for the labeling of "cable-ready" DTV receivers that will allow consumers to choose from among three different levels of "cable-ready" DTVs, depending on the level of functionality they wish to have.

Unfortunately, while these baseline agreements have been reached, the consumer electronics and cable industries have, so far, failed to agree on final "build-to" standards. This failure to adopt "build to" specifications is critical because their final specifications are indispensable for manufacturers to design and build DTV receivers that are simply "plug and play" with cable, i.e., do not need a cable set top box just as roughly fifty percent of cable subscribers today who have "cable ready" television sets and receive cable programming without a set-top box.  Similarly, there has been insufficient progress on so-called "middleware," an essential component for advanced interactive services which will require a cable set-top box.  Genuine agreements between the parties, not unilateral press releases, are needed to move these cable compatible DTV receivers off the drawing boards and into cable consumers' homes.  Nor has final agreement been reached on cable delivery of PSIP data according to established standards.[7]  Final agreement on each of these items, in addition to copy protection, which I will address momentarily, is essential.

CEA believes that the primary reasons for the lack of progress in reaching final agreement on these DTV/cable compatibility standards are business related rather than technical. While the FCC has applied increasing pressure for rapid completion of these industry-led efforts, more needs to be done by either the Commission or Congress to spur final inter-industry accords.  If a final round of determined jawboning and more intensive oversight by the FCC and the Congress, especially this Subcommittee, does not produce the required breakthroughs, then mandatory standard setting processes may need to be implemented.  One thing is certain, however, there is no DTV transition if cable subscribers are left in the dark.

DTV Copy Protection Can and Must Be Crafted to Balance the Existing Rights of Both Content Owners and Consumers

A major obstacle to greater availability of quality DTV content is the need for final resolution on adequate and reasonable standards for DTV copy protection.  CEA and its member companies are committed to working with other parties to ensure that copyrighted content, when transmitted in digital formats, is adequately protected against commercial piracy in a manner that preserves the fair use rights of American viewers.  In addition, the potential for Internet retransmission of broadcast programming raises legitimate concerns that the consumer electronics industry is willing to work with broadcasters and the content community to address. 

The idea that the introduction of DTV technology renders mutually exclusive the rights of content owners to protect their works from unlawful copying and redistribution, and the right of consumers to make recordings of digital content for personal, non-commercial use is clearly wrong.  Both of these fundamental and hard-fought rights are as defensible and desirable in the DTV domain as they are in the analog environment.  It is therefore not a question of whether to protect either right, but how to protect both. 

As a matter of public policy, consumers would balk if the transition to DTV turns out to be regressive in terms of their ability to time shift, build a home library of recorded video, and  enjoy the full functionality of the consumer electronics products they purchase, compared to what they currently experience.  In this regard, the cable industry's proposed PHILA license setting forth terms and conditions for the operation of consumer electronic devices that can be connected to cable systems raises serious concerns.[8]  It should be published by the FCC immediately for public comment to enable those concerns to be aired. 

CEA and its member companies believe the following principles should guide a renewed, cooperative effort among the affected industries to develop technology and licensing terms required for a robust, yet consumer friendly, copy protection regime for digital television:

Ø      Consumers should be free to copy and store for their own use, free, over-the-air DTV broadcasts.

Ø      Consumers should be able to enjoy the same reasonable and customary home recording practices for content received via all digital delivery systems (i.e., DTV, digital cable and digital satellite) as they do with analog technologies, to continue building home video libraries.

Ø      Encryption of DTV or HDTV programming should not prevent viewing on DTV receivers, or storage and viewing on such devices as personal video recorders, by any consumer who has paid for the right to do so.

CEA and Thomson commend the Members of this Subcommittee, particularly Chairman Tauzin and Representative Boucher, who have recently spoken out on the need to balance the rights of content owners and the need to protect consumers' fair use rights as the digital revolution moves forward. 

In essence, the affected industries must reach agreement on both copy protection technology and a fair set of recording rules.  Compromise is needed, and overreaching must be avoided.  But consumers' interests cannot be sacrificed.  If consumers discover that their PVRs or digital video recorders are not working or are erasing after 45 minutes because of unilateral measures taken by content owners, then consumers will revolt and the DTV transition will be set back immeasurably.  Congress and the FCC should not let that happen. 

Consumers Must Have Access to Competitive EPG Services

Although electronic program guides ("EPGs") are rapidly assuming increased importance in the world of analog television, they will become virtually indispensable to consumers in the digital environment.  They will play a role functionally equivalent to an analog receiver's channel dial or remote control and, as such, will be a critical tool to navigating through a 100+ channel universe simply, accurately and with a minimum of confusion imposed upon the consumer.  It is critical that no gatekeeper be allowed to limit the extent to which consumers can choose among competitive EPG services, and have access to the tools which best facilitate their introduction to and use of DTV services.

Cable operators have an economic incentive to discriminate against competitive EPGs in favor of those EPG services which they own or in which they hold a financial interest.  This threat is not merely theoretical.  Even in the analog environment, some cable operators stripped EPG data transmitted by broadcasters in the vertical blanking interval so as to force consumers to use the cable operator's EPG service.[9]

Importantly, the availability of EPG data transmitted with the DTV broadcast signal does not dictate consumer use of or subscription to any particular program guide, but rather enables the consumer to choose among a competitive array of such services, including program guides offered by the cable operator.

Thomson and CEA believe the FCC has authority to require cable carriage of EPG data, but, in its DTV Must Carry Report and Order, chose not to exercise this authority.  We urge Congress to review the FCC's narrow interpretation in this matter, with an eye toward ensuring that no gatekeeper denies consumers the ability to access a competitive array of EPGs.

Congress Should Reject Government Mandates That Would Increase Consumer Costs and Dampen DTV Innovation

1.                  An Attempt At Economic Engineering With A Digital Tuner Requirement Will Slow The Process Down.

The FCC has a pending rulemaking proceeding seeking comment on a proposal to require that digital tuners and reception capability be added to every television set offered for sale in America above a certain size.  Our experience in the marketplace and our knowledge of the associated costs convince us that such a mandate would be counterproductive.  Rather than accelerating the DTV transition, it would likely trigger an angry consumer backlash which could bring the DTV transition to a screeching halt. 

Approximately forty percent of TV sets sold in the U.S. today are 20" or less.  Their retail prices are in the range of $89 to $220.  Adding DTV reception capability to these sets, commencing in 2003 as some have urged, would double or triple their retail price.  Does anybody on this Subcommittee think consumers will embrace such a new price structure?  I suggest not.  It is no wonder that the Consumer Federation of America and seniors groups have roundly condemned this proposal as a regressive DTV tax.  It would hurt the vast majority of consumers and slow the transition by removing from the marketplace today's lower cost TV sets that otherwise are perfectly good candidates for digital signal reception through set-top converter boxes.

Let's be clear that adding DTV reception capability to analog NTSC television receivers is not a trivial task.  It is NOT adding just one chip, or even two or three chips.  It requires adding a substantial amount of circuitry, several expensive chips, memory, filters, and interface devices - not to mention software and switching changes.  All of these components add up in cost.  Moreover, digital television technology is still in its infancy.  Unlike analog television receiver technology with the benefit of more than 50 years of cost reduction, DTV sets only have been on the market for 2 or 3 years.  Even with an aggressive cost reduction curve, the electronics package required to receive, decode and display digital television will still command a $200 per unit cost premium over required analog circuitry for the foreseeable future.  This does NOT include amortization of any design and development costs, which could be in the tens of millions of dollars for each manufacturer.  Suggestions like that made by one witness at the March 1, 2001, Senate Commerce Committee hearing that adding DTV reception capability could be done for $1 per receiver are completely and utterly baseless and disserve the much needed oversight processes initiated by the Commerce Committees of the Congress.

There is nobody more interested in selling millions of digital television receivers than Thomson and other consumer electronics manufacturers.  But we cannot, and we will not cram them down consumers' throats.  We believe fervently that consumers will be willing to pay a price premium for DTV receivers and other DTV products once there is exciting and abundant original and innovative digital programming, including HDTV, available for viewing and once consumers can be certain that they can receive such programming over cable.  Then, nobody will have to force consumers to buy DTV receivers; they will rush to buy them just as they did when DBS entered the market.  These increased volumes will drive costs down even further.  That is the history of this industry. 

Not only would a DTV tuner mandate likely harm the DTV transition, but it is a striking example of an inappropriate role for government to play in the marketplace.  Unlike closed captioning or the V-chip which government required to promote certain social goals and the costs of which were modest and absorbed by the consumer electronics and broadcast industries, a DTV tuner mandate would serve no extrinsic social goal and would be very expensive for consumers.  If, indeed, there is a marketplace failure warranting government intervention, consumers should not be the ones to pay for it. Would broadcasters' enthusiasm for a DTV tuner mandate be somewhat diminished if Congress also required broadcasters to pay for the increased receiver costs resulting from such a requirement, as Mark Cooper of the Consumer Federation of America suggested in his recent testimony before the Senate Commerce Committee?  I suspect the proposal would disappear from the broadcasters' DTV "to do" list. 

2.                  Government-Imposed Receiver Standards Serve No Useful Purpose in an Already-Competitive DTV Marketplace, and Would Stifle Innovation.

Finally, CEA and its members, including Thomson, strongly oppose broadcasters' continued calls for government-imposed performance standards for digital television receivers.  The FCC has repeatedly rejected this notion, most recently in January of this year in its Biennial Review of the DTV transition.  The FCC noted that "DTV receiver manufacturers, driven by market forces, are continuing to make significant improvements in their products, particularly in the area of indoor reception and multipath signal handling capabilities."[10]  The FCC correctly concluded that government mandated performance standards would impede innovation and lead to lowest common denominator solutions.  It is a bad idea, and it should be rejected. 

Conclusion

In closing, I would like to again thank the Members of this Subcommittee for their longstanding commitment to making digital television a reality for Americans.  America's consumer electronics manufacturers are delivering to American consumers products that allow them to exploit and enjoy all of DTV's capabilities, and at increasingly affordable prices.  We urge Congress to continue to play a constructive role in eliminating what last obstacles remain to achieving a rapid and smooth transition and welcome the opportunity to take part in any efforts that will further those goals.  And, we recognize our responsibility as one of the key industry stakeholders to complete successfully the long journey to the digital television era. 

We ask all industry participants to take stock realistically of where we are today, reach a consensus on the significant obstacles that are impeding the DTV transition and then work to create market-based solutions supplemented, if absolutely necessary, by government regulation where there is market failure.  The industry segments need to be honest with each other and not overreach.  Above all we have to rededicate ourselves to the principle that consumers must be the beneficiaries of the DTV revolution and cannot become pawns in a high stakes game for competitive advantage along the way. 

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