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H.R.___, Regarding the Transition to Digital Television
Subcommittee on Telecommunications and the Internet
Mr. Richard M. Lewis
Mr. Chairman, my name is Richard M. Lewis, and I
am Chief Technology Officer of Zenith Electronics Corporation. I
appreciate the opportunity to appear before you and the Committee today to
discuss digital television (DTV), an issue in which Zenith has a long and
continuing interest. Background By way of background, Zenith is not
a newcomer to DTV. We have been investing in this transition from the very
early days, since before high-definition television (HDTV) was digital, starting
in 1987 with Zenith becoming a founding member of the Advisory Committee on
Advanced Television Services (ACATS) of the Federal Communications Commission
(FCC). In 1988, Zenith proposed one of the original 23 HDTV systems.
In 1990, the FCC mandated that the HDTV standard would be based on the
"simulcast" approach proposed by Zenith, and one year later we at Zenith
completed our development work on the first version of the vestigial sideband (VSB)
digital transmission system. We were instrumental in the formation of the
Digital HDTV Grand Alliance, whose goal was to merge proposed DTV systems into a
single best-of-the-best standard. In 1994, the Grand Alliance and the ACATS
chose Zenith's VSB technology as the broadcast and cable transmission
standard. In 1996, the FCC adopted the digital broadcast standard based on
the Grand Alliance system, which includes Zenith's VSB transmission
technology. Since then, our company has worked aggressively to help launch
HDTV, has introduced innovative DTV products (more than 80 percent of Zenith's
current product line is digital), and has continued to invest in developing new
enhancements for the digital transmission system, which are currently under
consideration by the Advanced Television Systems Committee (ATSC). As you
see, Zenith has a long involvement and expertise in this issue. Status of the Transition Today Mr. Chairman, you as well as the
Chairmen of the full Committee (Mr. Tauzin) and of the FCC (Mr. Powell) have
been actively engaged in digital television. Your interest and prodding
have been helping to accelerate the DTV transition, and we at Zenith agree with
you and other policymakers about the importance to our Nation of continuing our
progress in this transition. Today 475 TV stations are
broadcasting digitally. DTV signals are now transmitted in 143 markets and
reach 90 percent of U.S. TV households. In addition, 45 percent of all
U.S. TV households are in markets where four or more DTV signals are being
transmitted. The level at which consumers are purchasing DTV products is
astounding. The amount of DTV products sold in July of this year was 81
percent higher than during July 2001. Significantly, July also marked an
important milestone as industry sales revenues from digital TV products
surpassed those from analog for the first time. More than 400 DTV products are now
on the market, and the Consumer Electronics Association (CEA) estimates that 2.1
million DTV products will be sold in 2002, increasing to more than 4 million
next year. Prices for DTV products are falling at a rate of 2 percent each
month. The average selling price for a DTV product in 1998 was $3,500;
today, it is half that amount. In Zenith's product line alone, we offer
entry-level integrated HDTVs under $1,500, HDTV monitors for under $800 and
digital set-top boxes for under $400. Despite the naysayers, clearly, consumers
like what they see and are purchasing more and more of these devices. But they have been discouraged by a dearth of
compelling digital programming, and the availability of digital content for
viewers continues to be a critical issue. There is good news to report on
that front, as well. In the fall season just beginning, CBS is continuing
its leadership by offering all of its primetime comedies and dramas in HDTV, the
fourth consecutive year it has broadcast the majority of its primetime schedule
in HDTV, as well as many sports programs. For the second year, ABC will
broadcast all of its series and theatrical movies in HDTV, including
surround-sound. Zenith is proud to sponsor primetime HDTV broadcasts in
conjunction with these networks as a key element of our advertising program to
promote DTV. Cable and direct broadcast satellite program providers
such as HDNet, HBO, Showtime, Discovery and others are initiating new digital
programming, including HDTV, but these programs are not available to terrestrial
broadcasters. The best impetus for the DTV transition is compelling
applications, including high definition programming for our customers to view. All of these factors show that the DTV transition
is well underway, and momentum is growing. However, work remains to be
done before the Nation will realize the full fruit that can be borne from our
digital future. Tuner Standards As you know, last month the FCC adopted
regulations to require off-air DTV tuners on nearly all new TV sets by 2007.
This is to occur on a five-year phased-in schedule, beginning with larger, more
expensive TV sets. While some manufacturers oppose such mandates as a
matter of principle, we at Zenith agree that the FCC concept makes sense,
believing that a phased-in approach will be the best way to provide consumers
with cost-effective products while accelerating the DTV transition.
We arrived at this conclusion because we recognize that the cost premium for
adding ATSC reception capability to sets is already less than $200 and will
decrease rapidly. Economies of scale driven by the increased sales
volume from the tuner mandate and integration and consolidation of functions
into single chips will enable this cost premium to decline even more quickly.
For example, ATI (a leading chip manufacturer) estimates that, due to increased
volume and further chip integration, the cost of a DTV tuner will be under $75
by 2004. Some have spoken of doubling the cost of a
television by introduction of a tuner mandate. This is simply not going to
happen. Zenith believes that, by the time digital reception capability
ultimately is included in small-screen TVs, the cost of producing a digital
receiver should be essentially comparable to the cost of producing an analog
receiver. Using the phased-in approach outlined in the
FCC's tuner mandate, starting with large screen sets, the cost of
implementation is offset by routine declines in industry pricing. By the
time medium screen sizes are affected, the cost of implementation will have
dropped due to increased volume, and once again in many cases competition-based
price reductions will have offset the incremental digital costs. Consumers
will end up with a feature that benefits the public interest in accelerating the
DTV transition, with minimal financial impact on consumers. Some may view our decision to support this
initiative as self-serving based on our intellectual property position related
to the ATSC standard, which I described earlier. Clearly, Zenith, other
consumer manufacturers and many other parties will benefit from a rapid
transition, but our motives are based on an honest evaluation of what will
accelerate the transition and allow our Nation to achieve important public
policy goals, including reclaiming analog spectrum as soon as possible. Suffice it to say, there has been some
disagreement among manufacturers about the necessity for such a mandate.
The FCC has now acted, and we at Zenith are moving forward with plans to comply
with the FCC's directive. Section 9 of the proposed legislation affirms
the FCC's authority to provide the mandate, and we are supportive of the
schedule set out by the FCC for the reasons I have mentioned above. Remaining Issues Despite the advances to which I have referred,
the remaining issues are significant and pose storm clouds on the horizon of the
DTV transition. 1.
Cable Compatibility With the terrestrial DTV tuner issue resolved,
the largest remaining obstacle to the DTV transition is the inability of
consumers in this country to purchase DTVs and set-top boxes that connect simply
and directly to a home digital cable jack, anywhere in the country. Cable
compatibility - which today permits consumers simply to connect their cable
directly to a TV without a separate set-top box - is something Americans have
come to expect. Congress recognized the importance of cable compatibility
when in 1992 it enacted section 624A of the Communications Act of 1934,
requiring compatibility of cable and consumer electronics equipment. Today, approximately 70 percent of American
households receive their primary TV signals by means of their cable system, with
the majority receiving existing analog service over plug-and-play standard TVs
without the need for a set-top box. As manufacturers, we believe that it
is critical to the success of the DTV transition that a national deployable
cable standard be instituted as quickly as possible. As you may know, representatives of the
cable and manufacturing industries have been meeting to attempt to resolve the
cable compatibility issue, in accordance with section 629 of the Communications
Act of 1934. Good progress has been made in this regard, many issues have
been resolved, and positive discussions continue. We have committed to
update the FCC on the status of our efforts by mid-October. Still,
government action, as addressed in the draft legislation, will assure that
technical standards are put in place and supported fully by all cable operators
nationwide, and that acceptable business terms are applied for implementation of
the standards in retail consumer navigation devices. Cable operators should be required to support
consumers' equipment that complies with common national technical standards.
These standards would enable consumers, using unidirectional (downstream-only)
retail equipment and a cable operator-provided Point of Deployment ("POD")
security card, to receive and navigate premium cable programs that require
specific authorization, and view a simple program guide with accurate data.
The standards also should provide for nationwide portability of consumer
equipment. This is essential to ensure that consumers' investment in
their equipment is not lost when they move. The draft legislation
addresses this issue. The standards also should provide increased
protection for the cable network from harm and theft of service.
Manufacturers recommend that the standards be based on consensus technical
standards set by American National Standards Institute (ANSI) accredited
consensus standard developers, under procedures that offer all interested
sectors an equal opportunity to participate in their development. The
draft bill requires that the ANSI standards be used. Any standards
established should evolve to keep up with technological change, with a balanced
industry council to advise on changes as necessary. The standards
should be used by cable operators in the equipment they provide to consumers
starting no later than the date when integrated security is phased out
(currently scheduled by the FCC for 2005). The draft bill establishes this
date as the appropriate timetable. The tuner standard mandated by the FCC presents
an opportunity for rapidly integrating cable compatibility, since the circuitry
required to add digital reception capability in a TV achieves more than 90
percent of what is needed to add cable reception as well. Significant
economies of scale could be achieved if the integration of both capabilities
could be done simultaneously. The FCC has mandated a right of attachment
for retail navigation devices, and standards should be adopted that include the
right of manufacturers to incorporate POD security module technology into such
devices, subject to reasonable licensing terms and manufacturers'
self-certification of compliance with cable compatibility standards. Of
course, nothing should preclude manufacturers (both consumer electronics
manufacturers and proprietary suppliers of equipment to cable operators) from
exceeding the standards voluntarily, with products such as future "Open
Cable" ready sets. Zenith agrees with the DTV cable compatibility
provisions in the draft legislation. However, the requirement to include
"secure digital connections" on all digital televisions goes too far.
As in the analog world, many small- to mid- sized TV applications do not require
connections to external equipment. Market forces will assure that the
required connectivity is available to consumers. Furthermore, making these
connectors "upgradeable to successor digital interface technologies" is a
daunting, if not impossible, task because the technical requirements for these
future interfaces is unknown. We support the proposed standard that CEA
submitted to the FCC because it accomplishes many of the goals that I have
mentioned. The proposal will promote the DTV transition by enabling an
open and innovative marketplace for DTV cable products. If all cable
systems complied with this standard, purchases of DTV cable products would
increase because consumers would have confidence that their purchase will work
anywhere in the United States. This would move us forward toward
widespread adoption of DTV. 2.
Broadcast Flag In 1984, the Supreme Court affirmed the
capability of consumers to make copies of TV broadcasts for their personal use
("fair use" rights). Fair use is extremely important in the digital
age. Consumers should continue to have the right to private, noncommercial
home recording of content that originates as free terrestrial broadcasts,
without any authorization being required or without any technical restrictions
regarding that home recording. As you know, discussions have been ongoing
among content providers, broadcasters, information technology companies,
consumer representatives and consumer electronics manufacturers regarding the
suitability of a "broadcast flag" approach to restrict the unauthorized
redistribution of TV programming. In order for there to be a sufficient amount of
HDTV programming to drive consumer interest and investment in DTV, we must
ensure that content owners have confidence that the works they release,
regardless of the distribution method, are protected from illegal piracy, and
especially from instantaneous, unauthorized retransmission over the Internet.
The DTV transition cannot be a step backward in terms of the protection of
copyrighted works. Zenith has no intellectual property interest in
any content protection technology. We do believe that the "broadcast
flag" proposal as currently envisioned is a workable solution that balances
the needs of copy protection rights against "fair use" rights if applied
appropriately. As recently as last week, a large cable operator in an
urban market had marked all digital content as "Copy Never," preventing
digital recording of any kind.[1] It is this kind of
misuse that causes us concern, and we urge that any legally mandated
restrictions intended to protect intellectual property rights be narrowly
tailored to preserve consumer home recording rights. Further, we are concerned that certain parties
are proposing a broadcast flag process that does not contain objective criteria
to allow new technologies to be "approved" for the purpose of protecting
content. Rather, the current proposal in this regard is completely
subjective. This could thwart investment in technology development,
because companies will be unsure if they can gain approval even if a technology
is shown to be superior. Zenith notes that the draft bill requires
that the technical criteria to be established must be objective, and applauds
this support for a critical issue. The draft legislation preserves the functionality
of digital equipment with analog and existing digital tuners, a provision with
which Zenith agrees. It is also desirable, as the bill proposes, that
changes due to technological advances should be accommodated. In addition,
the draft bill by statute would preclude analog outputs in equipment after July
1, 2005; Zenith does not think it is necessary to set this prohibition in law.
The reality is that analog outputs eventually will not be included in equipment
because of the transition to a digital environment. It is not necessary,
therefore, for Congress to intervene in the manufacturing process through this
kind of prohibition. 3.
Cable must-carry Because so many households in our country receive
their television signals by means of their cable system, it is essential that
cable companies carry digital signals if we are to make a successful transition
to DTV. Cable carriage of digital signals is pro-competitive,
pro-consumer, and most importantly required by law. Title VI of the
Communications Act of 1934 requires that cable operators carry the signals of
local commercial television stations. Sections 614 and 615 were adopted
because Congress determined that, without mandatory carriage provisions, the
economic viability of local broadcast television and the capability to generate
valuable local programming would be endangered. Must carry enables
consumers to view local news, public affairs, and other programming on their
local broadcast stations. Congress intended that cable systems would be a
conduit for DTV services, benefiting consumers and ensuring the strength of free
over-the-air broadcasting. Cable operators argue that requiring this
carriage will diminish their capability to offer a broader variety of cable
services, but this argument is not valid in the face of rapidly expanding cable
channel capacity. Cable operators must carry local broadcast signals,
including multicasting applications, if programming choices are to expand, and
in order for us to achieve a near-term transition to DTV, with the resulting
return to the government of spectrum used for analog services. Conclusion The consumer electronics industry, and Zenith in
particular, have been at the forefront of efforts to achieve a successful DTV
transition. The success of our company is tied directly to the success of the
digital transition and the strength of our conviction can be judged by our
actions. We have made major investments in DTV R&D for
15 years, developing standards and technologies for HDTV broadcasting, and we
continue to invest in enhancements to further extend the capabilities of DTV
technology. Zenith is the sole sponsor of ABC's primetime HDTV lineup, and we
have expanded our role with CBS as lead sponsor of the network's primetime
HDTV programming. We are aggressively introducing a broad line of DTV products,
including low-cost integrated HDTVs. We are helping consumers to find
what's on the air in HDTV in their area through our web site. And we
have been supporting the United States' effort to establish the U.S. DTV
standard throughout the Americas. Together, industry and government have made
significant progress, but more remains to be done. All parties need to
step up and do their part to get the remaining issues resolved. A
successful DTV transition is dependent on the adoption and implementation of a
nationwide standard for sending DTV over cable. It is critically important
that cable systems and DTV products be compatible. We must conclude
the digital must carry debate, and copy protection issues must be settled.
High-quality programming is absolutely required so that consumers receive value
for their investment. I am confident that these issues can be addressed if
we all work together, but we must act promptly.I commend you, Mr. Chairman, and
the other Members of this Committee for your ongoing efforts to move the various
industry sectors toward agreement on these matters. I will of course be
glad to attempt to answer any questions you may have, and I thank you again for
this opportunity to appear here today. SUMMARY OF TESTIMONY OF
RICHARD M. LEWIS September 25, 2002
RICHARD M. LEWIS CHIEF TECHNOLOGY OFFICER ZENITH ELECTRONICS CORPORATION
Richard M. Lewis is chief technology officer (CTO) for Zenith Electronics
Corporation, a long-time leader in high-definition and digital television
technologies.
Lewis is Zenith's senior corporate officer responsible for technologies and
standards related to digital television, HDTV and data broadcasting. Lewis, who
also serves as senior vice president, research & technology, oversees all of
Zenith's technology initiatives, encompassing research & development,
engineering and digital business development.
Before being named Zenith's CTO in 1999, Lewis served as vice president of
picture tube operations, vice president of corporate development, and corporate
director of quality. Prior to joining Zenith in 1997, Lewis spent 18 years at
Teradyne Inc., where he held key engineering, operations and business planning
positions. He also was responsible for total quality management in the
Telecommunications Division and led five award-winning quality improvement
teams.
Lewis earned a Bachelor of Science degree in electrical engineering from the
University of Iowa in 1978. Zenith Electronics Corporation, founded in 1918,
is a leader in DTV technologies and inventor of the U.S. digital HDTV
transmission system adopted by the FCC. Zenith's corporate headquarters
are in Lincolnshire, Ill.
[1]
Cablevision in New York City, San Jose Mercury News, September 18, 2002.
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