Hundt Sets New Standards

A digital TV proposal puts the FCC chairman at odds with Microsoft and others

On May 9, Federal Communications Commission Chairman Reed Hundt did something he has never done before -- he threw his weight behind a specific technology standard.

Hundt, a Clinton appointee, prides himself on being a deregulatory-minded regulator. As such, his decision to vote in favor of requiring a certain digital television standard -- a proposal that was echoed unanimously by the rest of the commission -- was not only a departure, but a difficult decision.

What's more, it has put him at odds with a formidable computer industry coalition whose members include such high-tech giants as Redmond, Wash.-based Microsoft Corp., Intel Corp. and Compaq Computer Corp.

"I have never [before] voted to impose an exclusive standard since I've been here," said Hundt in an interview immediately following the commission's vote. However, he said, "I don't want to stand in the way of progress and we've come up with a creative idea."

The FCC usually does not set standards. While the agency held auctions for personal communications services airwave licenses, for example, it did not tell the winners which of several competing technologies they should use for wireless phone products.

After eight years of analyzing the possibilities and talking to industry, the commission proposed to require the Advanced Television Systems Committee digital TV technology, a standard designed by a private group called the Grand Alliance. If finalized, all broadcasters that transmit digitally would have to use the standard.

Some, including the federal government's Information Infrastructure Task Force, the NIST/DARPA Workshop on Advanced Digital Video and the Information Technology Industry Council, have embraced the standard, saying it not only provides the best picture quality but also is flexible because it allows for a variety of formats.

Others continue to voice their opposition.

"We have serious concerns with the Grand Alliance recommendation, and we think the proposed FCC standard doesn't provide for full convergence between television and computer platforms," said Jack Krumholtz, Microsoft's manager of government affairs.

Hundt had earlier appointed Microsoft Corp. senior vice president Craig Mundie to the FCC's Advanced Television Systems Committee. For his part, Mundie voiced his objection to the Grand Alliance's design and later abstained from the committee's final vote.

Today, Microsoft belongs to the Computer Industry Coalition on Advanced Television Systems, a group whose membership includes Compaq, Houston; Intel, Santa Clara, Calif.; Apple Computer Inc., Cupertino, Calif.; and many others. The coalition is not finished with its lobbying efforts on this issue -- it expects to participate in the comment period before the proposal is finalized.

"While we have broad industry consensus, we do not have unanimity," said Hundt, who admits he's not excited about the requirement.

His colleagues were much more supportive of the decision. "Manufacturers need certainty before they can begin producing advanced television receivers.... There is not room for fits and starts," said Commissioner Susan Ness in a separate statement. Consumers, too, want certainty, she said. "They need to know that the television set they buy in Louisville will work when they move to Lincoln, Little Rock or Lubbock."

Proponents of the standard also pointed out that for digital television to work in the United States, the government must jump-start it. Under law, broadcasters must get approval from the FCC, while cable can go digital at any time. Direct Broadcast Satellite is already digital and has the capability to provide high-definition TV.

The market, especially now that the FCC has made its move, is expected to be enormously successful. Emily Green, an analyst at Forrester Research, Cambridge, Mass., said DBS is the first significant TV technology in 40 years. "DBS is a digital Trojan horse," said Green. "Its initial success will pave the way for other digital technologies to invade television."

Green said consumers ultimately will be better off with digital TV. Improved sound and picture, more programming choices and personalized viewing are all ahead. The ability to avoid watching commercials will be a problem for advertisers but a boon for the average watcher.

With digital television, a region with six channels could have 30 and a city with 12 channels could jump to 60.

Just two days before the FCC proposed mandating the standard, WETA, the Washington, D.C.-based Public Broadcasting System affiliate filed an application with the agency to operate an experimental advanced television station. Commissioner James H. Quello said at the meeting that the WETA plan makes him extremely optimistic about digital TV.

"Should this application be granted, we will all be able to see firsthand the development of a digital television system on one of the premier public television stations in the country," Quello said.

The technology also allows for expansion beyond the traditional TV offerings. Broadcasters would be able to send text and data such as newspaper copy as well as software to the new televisions.

The result, said Hundt, is that "televisions are going to get smarter." While Hundt said he doesn't see TVs and computers becoming the same machine, he predicts they will become more similar. As such, Hundt wants the digital TV standard to guarantee interoperability between the two.

Despite his enthusiasm for the future of the TV industry, Hundt still has many reservations about imposing a standard.

"I have seen nothing yet that persuades me that the commission was wrong in 1988 to express skepticism about government-mandated television standards because such requirements may reduce consumer choice and prevent the timely introduction of new technology," said Hundt in a separate statement.

Among other misgivings, Hundt said he's worried about requiring one standard when technology changes so quickly and unpredictably. He also questioned why broadcasters should have to go through regulatory hoops to experiment with other technologies.

And in the end, said Hundt, the success or failure of digital television will rest with marketing the technology.

In the interview, Hundt reiterated: "We need to get rid of rules." He may still have it both ways: The FCC proposal raises the possibility of adopting a "sunset provision," which could eventually make compliance with the digital TV standard voluntary.

The sunset would come after digital technology was safely part of the industry and no longer needed a regulatory push. That could be the ideal compromise, said Hundt.

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