The Powell Plan is voluntary. Got that, cable guys?
It was easy to lose count of the number of times Federal Communications Commission officials invoked the word "voluntary" last week at the National Association of Broadcasters convention here.
The reason for the barrage was apparent: Many thought the plan was voluntary in name only, and that any industries that planned on balking were looking for trouble.
On the eve of the convention, FCC Media Bureau chief Kenneth Ferree warned the cable industry to embrace chairman Michael Powell's digital-TV transition plan — or bad things could happen to it at the agency.
No sooner had Ferree's remarks surfaced in the media than he and other FCC officials went into rapid clarification mode.
"I've talked to Ken at length, and I think he is misinterpreted in that suggestion," Powell told reporters here last Tuesday. "I think the commission is comfortably consistent in that the plan is voluntary. It is an effort to bring parties together around a solution."
"It's a voluntary plan," added FCC chief of staff Marsha MacBride. "I don't think that there is any connection between an individual company's agreeing or not agreeing to participate in this plan and anything else that might be pending before the commission that would have an impact on that entity."
Ferree, who fielded a call of concern from National Cable & Telecommunications Association president Robert Sachs, said he did not mean to suggest that the merger of AT&T Broadband and Comcast Corp. — or various pending cable rulemakings — would somehow be affected if cable reacted negatively to Powell's plan.
"There is no reason to suggest that would affect any one particular proceeding, just that it is not good for their relationship in general with the FCC if they are not playing ball," Ferree said.
Washington, D.C., is a city in which lawyers scrub words, clauses and footnotes, looking for the slightest advantage. In the hazy world of media regulation, a dictionary isn't always the best resource for coming to grips with a word like voluntary.
"Voluntary in Washington has a different connotation than voluntary anywhere else," said NAB president Edward Fritts, who embraced the Powell plan, but suspects it's a road map for future federal legislation.
'THERE IS NO STICK'
Powell insisted that he didn't have a Louisville Slugger resting on his shoulder to encourage compliance.
"There is not a stick," he said. "Of course, there is no express threat of rules, but with the big caveat that the government is always a regulator, and it always has authority."
The Powell plan gives all players in the DTV transition a job to do.
Among other things, cable systems with 750 megahertz of channel capacity — or two-thirds of all systems — have to carry "up to five" high-definition channels from local TV stations or cable networks by next January.
"We think there should be five, basically," MacBride said when asked whether "up to five" could also mean zero HDTV channels.
Alternatively, cable could carry "value-added DTV programming," which includes "innovative multicasting" or "interactive" fare.
The plan, unveiled April 4 in letters to key Capitol Hill lawmakers, also calls on cable to provide subscribers with the option of buying or leasing a single set-top box that displays HDTV programming. Cable operators also would have to market "digital television products" on their systems and in their monthly bills.
The NCTA released a statement last week which suggested the industry did not plan to fill its HDTV quota with cable-affiliated programming.
"We welcome the effort by chairman Powell to provide his leadership on this issue and the cable industry looks forward to working with the chairman, as well as other industries, to help facilitate the broadcasters' transition to digital," the NCTA said.
The NCTA wasn't the only voice of cooperation coming from the cable industry. AOL Time Warner Inc. CEO-designate Richard Parsons called for closer cooperation between cable and broadcasting in a speech here last Monday.
"I consider that somewhat of a breakthrough for him to indicate that," Fritts said.
Recent moves by the Consumer Electronics Association suggest that Fritts may be right that voluntary means compulsory, with regard to the Powell plan.
The Powell plan gives TV-set makers until Dec. 31, 2006, to ensure that all new sets 13 inches or larger include DTV tuners. CEA officials have refused to endorse that idea, and have called it anti-consumer.
CEA BACKTRACKS A BIT
On the day the Powell plan surfaced, the CEA stuck to its guns and issued a release saying the DTV tuner proposal was "unnecessary" and would "undercut consumer choice."
The keys to the digital transition, the CEA said, are compelling programming and interoperability between digital cable and DTV sets.
Five days later, it issued a new release that articulated a more cooperative message.
"I think we were a little harsh when we came out at first," said CEA president Gary Shapiro. "What we want to do is encourage everyone in the transition to do what they can where they can."
CEA's change of heart likely resulted from turmoil within its ranks. Ferree said some TV-set makers told him they had no problem with including DTV tuners.
"Frankly, we've talked to some of the individual companies outside of the context of the associations. The companies say, 'Hey, it's not that big a deal. We'd be happy to do it,' " Ferree said.
Noted Powell: Shapiro "backed down quite a bit."
The Powell plan deliberately sidestepped two fundamental issues — the interoperability issue raised by the CEA and the protection of digital content from rampant piracy.
In his letter to Congress, Powell stressed that he would not endorse the idea that all DTV transition issues must be resolved before any of them are cleared up.
This fall, the four major TV networks and cable programmers Showtime and Home Box Office are eligible for HD cable and direct-broadcast satellite carriage if 50 percent of their primetime programming is in HDTV.
By Jan.1, 2003, TV stations affiliated with ABC, CBS, NBC, and Fox in the top 100 markets — which comprise 85 percent of U.S. households — would have to install HDTV pass-through equipment if their networks offered HD signals.
Will 400 network affiliates in the top 100 markets actually be transmitting digital broadcasts by the end of year? According to the NAB, 209 commercial stations have made the transition so far.
Powell said the FCC wanted to keep the pressure on TV stations to make the transition. Sixty-five percent of all commercial stations plan to miss the May 1 deadline to commence DTV broadcasting.
Legg Mason media analyst Blair Levin said broadcasters face an economic reality that apparently no amount of FCC help can solve.
"The fundamental problem with the transition remains, which is: How does this transition drive new revenues?" Levin said.
OTHER DTV PLANS?
Now that the courts have said cable operators may own TV stations in markets where they own systems, cable might have different plans on how the digital spectrum ought to be used. Levin said, "That can dramatically change how the transition works."
Although FCC member Kevin Martin supported the Powell plan as "an important first step," the Republican urged the FCC to soon consider another issue he believes could help DTV stations.
Under present FCC rules, cable operators are required to carry the primary video of a digital-TV station with mandatory carriage rights.
For now, those rights don't kick in until stations return their analog spectrum. The FCC has defined "primary" as one signal, thereby excluding mandated cable carriage of multiple digital signals from a TV station.
Some at the FCC, perhaps including Martin, believe that many TV stations would be more innovative with their digital spectrum — say, by offering HDTV in primetime and several free multiplex services during other dayparts — if they knew cable was required to carry multicast services.
It might even convince some TV stations to surrender their spectrum before 85 percent of TV households in a market have digital receivers.
"We should deal with that soon," said Martin.
The cable industry vigorously opposes mandatory carriage of multiple signals. The NCTA believes cable systems with many analog subscribers would be forced to carry at least one signal from a DTV station in analog and the rest in digital, which would mean allocating more than 6 MHz of spectrum to a particular DTV station.
In January 2001, Powell voted with the FCC majority to define "primary" as one signal.
"He was persuaded, I think at that time, that the definition of primary, as used in the statute, meant one," MacBride said. "I do want to clarify that he then quickly went to [Capitol] Hill and told them he didn't think that was necessarily the right policy result, and has been very vocal on that."
MacBride stated that the FCC faces a "high burden" if it intends to overturn the primary video decision. She said a ruling is in "a near time frame."
COULD NEED TEETH
If, in fact, the Powell plan is voluntary, some believe the plan will wither on the vine unless backed up by FCC rules or congressional action.
"Relying solely on voluntary efforts isn't going to work. I don't think you are going to see the cable industry engage in voluntary must-carry," said Colin Crowell, an aide to Rep. Edward Markey (D-Mass.)
Going forward, the NAB's Fritts argued, the test would be the extent to which all the players covered by the Powell plan do their part. If unity breaks down, Congress might step in, he said.
"I think the enlightened approach is to get with the program," Fritts said.
