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Kennard Warns Against Digital Loophole

Washington-To expedite the transition to digital television, Congress should tighten up the rule requiring broadcasters to return their analog spectrum in 2006, Federal Communications Commission William Kennard said last week.

Every TV station in the country received a free digital license in 1997, with the condition that all broadcasters return their analog licenses to the government for auction no later than Dec. 31, 2006.

But the 2006 return date contains a loophole that could allow for the indefinite possession of both licenses, Kennard said in a speech at New York's Museum of Television and Radio.

TV stations, Kennard said, can hold on to their analog license if less than 85 percent of households can receive digital-TV signals using a digital set-top box or a digital-TV set.

"Congress should reconsider the 85 percent loophole on the 2006 date, so that it doesn't become used as a 'trick number' to justify making the double dose of spectrum a broadcaster entitlement for the next 25 years," Kennard said.

Based on the penetration of other popular consumer-electronics products, Kennard said, the 85 percent threshold might not be reached until 2025.

"Eight-five percent? It took color TV 22 years and VCRs 16 years to reach that level of penetration," Kennard said.

The FCC wants to auction the analog spectrum as quickly as possible. Some, including Kennard, believe the auction could net the government $70 billion.

TV stations should not have the power to sit on such a valuable resource, Kennard contended. "If you're going to tie up twice your allotted amount of the people's bandwidth, perhaps you should pay some rent on it."

In that regard, Kennard said, Congress should impose an analog "spectrum squatters fee" on TV stations after Jan. 1, 2006. The fee would be a financial incentive for broadcasters to fully exploit their digital licenses.

In another proposal, Kennard said Congress should mandate that all new TV sets be equipped to receive digital signals by Jan. 1, 2003.

Kennard used the speech to launch some of his toughest verbal jabs at broadcasters. He said their claim on two TV licenses was akin to giving someone two rent-controlled apartments in the elite Upper West Side of Manhattan, and allowing one to remain vacant.

Such a situation, Kennard said, reminded him of the Twix candy bar commercial: "Two for me, none for you!"

All commercial-TV stations must transmit digital signals by May 2002. But to date, only 150 stations in 52 markets, reaching 64 percent of households, have started to offer digital service.

The TV-station lobby last week said any problems associated with the transition lie squarely with the FCC.

"While [Kennard] has been asleep at the wheel, we are well ahead of schedule in transitioning broadcasting from analog to digital television," said Dennis Wharton, spokesman for the National Association of Broadcasters.

In pinpointing the FCC's faults, Wharton said Kennard failed to require cable systems to carry digital-TV signals; did not adopt rules requiring interoperability between DTVs and cable systems; and failed to settle disputes about the adequacy of the digital-broadcast transmission standard.

"With the adoption of a few pro-consumer rules, the FCC could jump-start this transition today," Wharton said.

Kennard's proposal requiring that TV sets be equipped with digital receivers didn't sit well with the Consumer Electronics Association, which represents TV-set makers and retailers.

"We don't think it's a good idea. We oppose it," said CEA spokesman Jeff Joseph. "It makes no sense to mandate DTV receivers if there is nothing to watch. We need broadcasters to provide some quality high-definition programming."

Joseph said Kennard's proposal would also "limit consumer choice" by denying them the option to buy inexpensive analog-TV sets.