Digital TV Transition Focuses on Consumer Education.

Now that the federal government has a set firm deadline for the transition to digital TV broadcasting, consumer electronics firms are collaborating with broadcasters, regulators and retailers to make sure customers aren’t left behind when analog televisions go dark.

When the Feb. 17, 2009 deadline hits, broadcasters will only be allowed to send digital TV signals over the airwaves. Analog sets that aren’t connected to a cable or satellite service won’t be able to receive programming.

“If we don’t get this right, we’ll face a tsunami of public outrage,” said Jonathan Adelstein, a commissioner at the U.S. Federal Communications Commission, at the Entertainment Technology Policy Summit sponsored by the Consumer Electronics Association (CEA). “We have to work together to do what we can to get the word out.”

Although the industry and policymakers have been planning for the transition to digital TV signals for nearly a decade, Adelstein said that most consumers remain unaware of the switch.

The commissioner called for a public education campaign so the owners of an estimated 80 million TV sets that rely on over-the-air reception, about 13 percent of the U.S. market, don’t lose their reception when programming goes digital.

The industry is taking steps to educate consumers. Alan McCollough, chairman of electronics retailer Circuit City Stores, said his company is putting consumer alert posters in its outlets to warn customers about the transition.

“As folks buy new sets, this problem kind of goes away,” McCollough said. “But there’s a large base of televisions out there, and the question is how we make those folks aware [of the transition].”

The FCC, consumer electronics companies and broadcasters are also planning to collaborate on public-service announcements, in-store signs and product labeling to help consumers understand one of the largest technical shifts since TV was developed in the 1930s.

The FCC has budgeted $5 million for consumer education on the digital TV transition. To help prevent consumers from purchasing TVs that could quickly become obsolete, digital tuners were mandated in analog sets with screens larger than 25 inches as of March 1. Digital tuners will become mandatory in sets with smaller screens in March 2007.

The 2009 digital deadline was included in legislation President Bush signed into law Feb. 8. The consumer electronics industry and the federal government both wanted a firm date for the transition for several reasons. TV manufacturers hope the deadline will fuel demand for new sets and remove uncertainty that may have kept consumers out of the market.

For its part, the government promoted the transition because the digital signals will free up broadcast spectrum that can be auctioned for different uses, such as multimedia wireless services and public safety communications. According to the Congressional Budget Office, auctioning off licenses for the analog spectrum should yield at least $10 billion.

Consumers who rely exclusively on over-the-air broadcasts will need to purchase digital-to-analog converter boxes. For cable or satellite TV subscribers, the necessary signal conversion will be handled by their service providers. But even many of these houses have second or third unconnected sets that may be affected.

Because many over-the-air TV viewers live in low-income or rural areas that cable providers don’t serve, the transition plan calls for the government to issue $1 billion in the form of $40 vouchers to subsidize the converter boxes, which can cost between $50 and $60.

Despite the potential for consumer confusion, CEA expects sales of digital televisions to surpass their analog counterparts for the first time ever this year. CEA estimates that the 48 million digital TVs sold in 2006 will represent 62 percent of the $23 billion market.

Another factor expected to promote digital and high-definition (HD) TV sales is the proliferation of HD programming, which TV manufacturers hope will make the sets more tempting to consumers who have been waiting for prices to fall.

John Taylor, vice president of public affairs and communications for electronics manufacturer LG Electronics USA, said steps like highlighting HD shows in TV listings or at the beginning of programs can help boost sales.

“We have to remind people that their favorite programs are available in HD,” Taylor said.

But while sales of digital TVs grow and competitive pressures force broadcasters to expand their HD programming, that doesn’t mean media companies can afford to bypass consumers happy with (or unaware of the need to upgrade) their analog TVs.

“It’s a thorny issue because we need to maximize the number of [viewers], said B. Robert Okun, vice president of broadcaster NBC Universal’s Washington office. “We can’t afford to have anyone fall through the cracks.”

By Dave Pelland
Courtesy of http://www.KPMG.com