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Digital Television: A Private Sector Perspective on the Transition
Subcommittee on Telecommunications and the Internet
Mr. Martin Franks
Mr. Chairman, my name is Martin Franks. I am the Executive Vice President of CBS where one of my responsibilities is overseeing our transition to digital television. Rumors of the demise of digital television are premature. Great challenges are still before us, but I am absolutely convinced that if the industries involved, and the government, exercise diligence, cooperation and patience, we will deliver to the American people a marvelous improvement on what is already one of their favorite products: the news, public affairs, sports and entertainment programming that television brings into their living rooms each day. Do those who proclaim the digital transition a failure know that CBS is half way into its second season of offering the preponderance of its prime time entertainment schedule in digital high definition? This season, 18 of CBS's 22 hours of weekly prime time network programming are being broadcast in digital High Definition. Are they simply unaware that we are also in the second year of offering our viewers High Definition broadcasts of the U.S. Open Tennis Tournament and the AFC football championships, including this year's Super Bowl? Next month we will return to Augusta for our second HD broadcast of the Masters, and with the opening today of the NCAA men's basketball tournament, I am pleased to be able to remind the naysayers that we will once again broadcast this year's Final Four in High Definition. And, all of CBS's digital high definition programming is transmitted in the 1080I format, High Definition's highest definition. Our HD broadcasts are currently offered by thirty-seven of CBS's owned or affiliated stations covering just under one half of the nation. By the end of 2001, we expect to be transmitting HD network programming across more than 75 owned and affiliated stations, reaching well over two thirds of the country. The response from viewers has been encouraging, and anecdotal reports suggest that digital sets are finally beginning to ship and sell in quantity. I would be remiss if I did not acknowledge our digital partners who have helped make this success story possible: First, the digital CBS affiliates who have been fellow pioneers in our effort to assume digital leadership; Second, several innovative post production companies in Hollywood who have pioneered techniques to make the conversion of entertainment programming to digital High Definition easier and less costly; And finally, those who joined CBS in our digital leap of faith, our HD broadcast sponsor/partners: Mitsubishi, Thompson/RCA, Panasonic, Sony, Samsung, and Zenith. As I said at the outset, we do face daunting challenges that must be addressed and overcome before we can be completely assured that the transition to digital will be a success. It is also worth noting at this point that the digital transition is infinitely more complex than the most recent, but inapt, comparison, the conversion to color. Color was broadcast within the same frequency as black and white, and sets were compatible with one another. Moreover, there were many fewer players.no cable industry as we know it today, no computer industry, just three networks, and the only piracy seen in the industry starred Errol Flynn. By comparison, the digital transition must be pulled off within this viciously competitive industry sector, where the stakes are enormous, the technology is infinitely more complex, and where there are many, many more moving parts. Let me try to list some of the transition's challenges from CBS's perspective and, rather than pointing fingers, I will try to offer suggestions on how the affected industries, and the government, might play a constructive role in solving the problems. First, I should address a fundamental paradox that must be confronted about the transition. The government must decide what approach it wants to adopt regarding the remainder of the digital transition. At the moment, it has a contradictory stance. On the one hand, former FCC Chairs Reed Hundt and Bill Kennard established as one pillar of government policy an oft-stated preference for leaving most of the messiest details of digital television to the marketplace. At least so far, with the notable exception of Commissioner Susan Ness's brokering of a broadcast standards agreement, government has done far less that it might have to help resolve the issues of cable carriage, copy protection, interoperability, zoning and other local conflicts. There is nothing wrong with leaving those issues to the marketplace, so long as one remembers that the marketplace is not necessarily prompt or consumer friendly in resolving such issues. At the same time that some policymakers have proclaimed the virtue of leaving these difficult and contentious issues to the marketplace, the government has dealt itself a huge stake in the rapid completion of the transition so the analog spectrum can be reclaimed and auctioned in the near term. I am not sure the government can have it both ways. Left to the marketplace, the digital transition will happen, but it will take time and there will be dislocations, very likely including some for viewer/consumers. On the other hand, if auction revenue in the near term is paramount, government will have to play some greater role, at least stepping up its jawboning, to help resolve some of the outstanding issues. What are some of those issues? Not necessarily in any order: Tower siting - The transition cannot possibly succeed without major market stations getting their digital transmissions on the air rapidly. In Denver, the efforts of the major commercial broadcasters, including CBS's owned and operated Denver station, to get on the air at anything like full power have been delayed and frustrated by the local jurisdiction's refusal to countenance either short or long term options for the tower improvements necessary for digital broadcasting. Had the Denver Broncos made this year's Super Bowl, their hometown fans would have been unable to see their heroes in HD but for a last minute simulcast deal we were able to strike with another local station that has a temporary, low power digital antenna atop the office building it occupies. Unless the dispute over a permanent tower is resolved locally, and little in the three year long history of this controversy gives rise for optimism, the FCC may well have to exercise its authority to preempt the local government if full scale digital television is to come to Denver anytime soon. Another example of a localized transition problem happened to us in Chicago. When we first turned on our digital transmitter, it immediately caused massive interference throughout the city on thousands of older, analog cable boxes that can only output their signal on channel 3, the same channel the FCC assigned us for digital broadcasting. Rather than alienate a huge segment of the local audience, we shut down the transmission. We have worked very well with AT&T Cable to find a solution, but here is another instance in which the parties could use more active assistance from the FCC. Consumer Friendliness - A viewer/consumer wants to know that when they bring a new digital set home and hook it up that it will work at least as well as their analog set has. Unfortunately, for too many reasons, that is not yet the case.
Indoor reception of digital television signals is another potential viewer/consumer issue. We are all disappointed with the indoor reception performance of current digital receivers. However, several points should be noted. I believe that in the very near term, particularly now that lingering broadcast standard issues are resolved, set manufacturers will drastically improve the capability of their receivers with regard to indoor reception. We should also remember that the current NTSC analog system is hardly a work of art. After all, if NTSC transmission were perfect, or even very good, the community antenna industry that we now call cable might never have been born. Of course, cable is the other answer to reception problems. With 70 per cent of American viewers accustomed to receiving their broadcast programming over cable, it is hard to envision a successful transition to digital without resolution of the issues surrounding cable carriage of digital over-the-air broadcasts. As you may know, CBS and Time/Warner Cable forged a groundbreaking, national digital carriage agreement in which the level of intercompany cooperation, if not every detail of the agreement itself, should be a model for how broadcasters and cable approach this issue. Copy Protection - As over-the-air broadcasters, we are concerned that the copy protection scheme that is presently being discussed leaves us behind. We have absolutely no objection to our viewers being able to record us off air for their own viewing. However, without some measure of copy protection that makes unlawful piracy, particularly over the internet, more difficult, we fear that premium content, whether it is Titanic or Survivor, will not be made available to over the air broadcasters and will instead migrate to cable and satellite where its airing is more secure from piracy. In this regard, we welcome the letter sent by leading members of this Subcommittee and the full Committee, including the chairmen and ranking members, calling for inclusion of over the air broadcasting in any copy protection technology. The problems we face can be solved. The affected industries must redouble their efforts to cooperate, and the government must strike a better balance between a hands off policy and heavy-handed regulation that might stifle innovation or even kill the whole transition. But surely that balance can be struck. This committee's ongoing oversight, along with a slightly more hands on FCC to keep the affected industry players focused, may well be enough. Mr. Chairman. I really do believe the American people will come to love the options digital television will give them. As I noted at the outset, today is the first day of the Men's NCAA basketball championship on CBS. The next few days are among the busiest in CBS's broadcast year. In just the next 80 hours, we will broadcast 48 separate games to get down to the Sweet 16, and of necessity, many games will be going on at the same time. CBS is permitting several CBS affiliates to use the remarkable capacity and flexibility of the digital signal to multicast three or four games simultaneously and still for free to all who can receive them. Later in the tournament, that same digital bitstream will make possible extraordinary HD images when the field is narrowed to the Final Four. As broadcasters go forward and experiment with various combinations of multiple standard definition programming streams versus fewer but higher resolution programs, our viewers will tell us what they prefer, and we will finally have a tool to give them more than just one option if that is what they want. Mr. Chairman, one final point: CBS is doing everything within our power to advance the transition. We are doing so at considerable cost, and our current return on investment is small. But we welcome the chance we have been afforded to transition to digital. Over the air broadcasting is too important to the culture of this country to allow it to become a marginalized analog archipelago in a rapidly advancing digital ocean. That is why I do not understand the repeated suggestions that loaning broadcasters 6 megahertz of digital spectrum to effect this transition constitutes a giveaway. Without such a loan, there simply is no way to transition to digital while still serving the overwhelming number of American families who will continue to rely on analog television to deliver their favorite programs for the foreseeable future. That is no giveaway. It is responsible and farsighted public policy that ensures that the American people will have the analog, over-the-air broadcasts they have come to know and count on until they are ready and able to upgrade to the wonderful new product that is digital television. Thank you, and I will be happy to answer your questions.
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