DIGITAL DEADLINE

Today is the deadline for the nation’s 1,121 medium- and small-market television stations to begin broadcasting a digital signal. Seventy-four percent, nearly 850 of those stations, missed that deadline.

Blame these stations for ignoring both the will of Congress, which ordered this forced march into the digital future with the Telecommunications Act of 1996, and the authority of the Federal Communications Commission, which developed the rules to implement the law. Mostly, though, blame Congress and the FCC for ignoring some basic principles of both economics and human nature.

Ninety-five percent of the stations in the 30 biggest markets – 298 – began digital broadcasts on or near their deadline. The main reason most smaller stations didn’t is money.

The cost of going digital – towers, antennas, broadcast equipment – is pretty much the same (the average is in the $3 million range) regardless of whether the station has a potential audience of 5 million or 500,000. The same goes for the increased electricity demands, about $6,000 per month, of this power-hungry technology. But the 5-million station can demand much higher rates for advertising, it is more likely to be part of an enormous media conglomerate, and it has far greater financial resources from which to draw. According to a new status report by the General Accounting Office on the digital conversion, small-market broadcasters say the cost of the conversion can amount to as much as two-thirds of annual revenue.

Smaller-market stations also have smaller advertisers. Passing the increased cost along to them does not work – advertisers will pay higher rates only if their message will reach a larger audience relevant to their businesses. Digital technology can do a lot of things, but it does not create more people. The result, then, is that advertisers faced with higher ad rates and a strict advertising budget merely buy fewer ads.

These stations, the GAO found, also must deal with regulatory hurdles not faced by the large-market stations. The digital signal is much more susceptible to interference that the current analog technology and much taller broadcasting towers are required to avoid signal-blocking obstacles. Major markets – large cities – have tall buildings already in place that already are used for antennas. Many smaller-market stations told the GAO their applications to build towers are held up by everything from the Federal Aviation Administration to their local planning board.

None of these impediments are news. The excuses these smaller broadcasters give now for missing the deadline are remarkably like the reasons they gave the FCC four years ago that the conversion rules being formulated were unrealistic and unfair.

Similarly, the excuses the FCC gives now for the public’s slowness to embrace digital television are remarkably like the reasons the FCC was given back then that digital would not wow the public – the value simply is not there. The sets are far too expensive (about 200,000 Americans spent several thousand dollars each on digital televisions last year; about 35 million spent a couple of hundred on analogs). There is precious little programming that warrants digital’s ultra-sharp pictures and clear sound, especially since modern analog delivers almost the same quality at a fraction of the cost. Digital’s capability to allow stations to broadcast four or five programs simultaneously likewise fails to click due to the lack of programming – according to the GAO report, this multicasting will result in a lot of all-weather channels and even more reruns.

It’s worth recalling how this entire mandated conversion came to be. Back in 1996, Congress was convinced that the market for wireless communications was infinite and that economic growth depended upon a huge increase in available frequencies. Digital requires a much narrower slice of the frequency spectrum than analog; after conversion, the newly freed frequencies could be auctioned off and put to other uses. The proceeds from these auctions, once estimated at $50 billion, would be used to help balance the federal budget. The entire conversion to totally digital TV would be complete in 2006, a year picked for no other reason than it being an even decade after the law was passed.

Experts in wireless say the market is saturated for now and warn that the frequency auctions, the first of which is scheduled for next year, will fall far short of expectations. The wise move would be to move back the deadlines by a few years to give everything – the wireless market, the value of the frequencies, program quality and consumer demand – time to catch up.

Many smaller broadcasters told the GAO a forced conversion now that they cannot afford would compel them to sell their stations to media giants while their FCC licenses still are worth something. Those that still plan on converting soon say a rollback in the schedule would allow equipment prices to moderate, making the conversion more affordable. These two points have much relevance for Maine, which still has smaller locally owned stations and a public broadcasting network now in the process of spending the proceeds of a $10 million bond issue converting to digital in a state with virtually no digital viewers.

Rather than do the sensible thing and move the entire schedule back for a final conversion in, say, 2010, the FCC and some in Congress want to impose tougher penalties for missing existing deadlines. FCC Chairman Michael Powell even talks about requiring networks

to produce more digital programming and manufacturers more digital sets; that is, government oversight of TV all the way from the studio to the living room. Such a keen understanding of economics and human nature hasn’t been seen since the Soviet Union led the world in tractor production.