A paraphrase of Winston Churchill's famous WWII line, "It may not be the beginning of the end, but it may very well be the end of the beginning," served as the Consumer Electronics Association's official assessment of the state of the 18-year-and-counting transition to digital television at its 10th Annual HDTV Summit, held this past Ides of March in Washington, D.C.

Subtitled "The Analog Cut-Off" (ouch!), this convocation was more of a mop-up operation than a brush-clearing expedition. The technical pioneering work has been accomplished, the DTV/HDTV infrastructure has been built (at least nationally), and the naysayers (see last month's column) have been proven oh so wrong. Just a few years after the first set was sold, HDTV has already proven to be a phenomenal success, exceeding the expectations of even its most optimistic supporters in every way.

For instance, while color-TV household penetration remained a flaccid 5% after 15 years, HDTV managed Viagra-like numbers: 15% after just six years. Anyone old enough to remember the decades it took for color programming to distend to the point where consumers couldn't help but notice now watch in awe at the bountiful HD fare to be had after only a few years.

Admittedly, true HDTV is seen in only a small percentage of American homes, but 16.5 million "DTV products" (digital display devices, ATSC tuners, HD satellite receivers, etc.) have already been sold, representing an investment by consumers of approximately $30 billion. And that's just the beginning: the CEA projects that shipments will reach 36.6 million units by the end of 2005 and 67.3 million by the end of 2006.

Contrary to those who predicted that DTV would succeed but HDTV would attract only a few hobbyists, The CEA estimates that 87% of the money spent on DTV between 1998 and 2004 was directed at HDTV. And the CEA predicts more DTV sets than analog models will be sold in 2005. As CEA president Gary Shapiro enthused, "Soon DTV will be known as TV."

More indicative of HD's success was the non-HD focus of this year's meeting: how to complete the digital transition ASAP by ending analog broadcasting and getting the broadcasters to return the spectrum to the government for auction. This is more of a thorny political issue than a technical one, so what better place to have the discussion than Washington, D.C.?

What's the rush? The spectrum auction promises to yield between $5 billion and $17 billion or more (depending upon who you ask) to a Federal government drowning in red ink after five years of "fiscally conservative" tax-cut-and-spend GOP rule. Don't like politics in your home theater discussion? Get real: this summit was all about politics.

Keynote Speakers
The first politician to take the podium was Representative Joe Barton (R-TX), chairman of the House Committee on Energy and Commerce, who wants to introduce a bill as soon as possible setting a "hard cutoff date" for the end of analog broadcasting. Everyone wants a hard cutoff date, Barton said, ". . .except the broadcasters," who were the devils de jour. Barton asked the crowd if there was a catchy number he could assign to the bill and the choice was unanimous: HR 1080. Not that Mr. Barton appeared to understand the number's significance.

Next up was Fred Upton (R-MI), chairman of the House Subcommittee on Telecommunications and the Internet. Upton's the "freedom-loving" soul who sponsored the obscene "indecency bill," which the vast majority of Congressmen and women from both parties voted for, probably to inoculate themselves from opponent's advertising in the next electoral cycle claiming they are "for indecency" because they voted against the bill.

The legislation sets no clearly defined standards for what is and is not "indecent," yet it authorizes bankruptcy-inducing fines (up to half million dollars) on both performers and broadcasters, compounding the penalty when the same "indecent" material airs on multiple stations. In this paranoid environment, is it any wonder that many ABC affiliates recently refused to show Spielberg's masterful Saving Private Ryan, which had run without problem a few years earlier? Now that's indecent!

Last up at the podium—and looking like he came straight out of central casting—was Senator John Ensign (R-NV), chairman of the Republican Senate High Tech Task Force. Ensign spent most of his time reiterating what the others had said about the need for "date certain" legislation.

Yet there are thorny political issues that cause these politicians, who clearly want that auction revenue, to hesitate. For one thing, there are approximately 21 million households—mostly the poor and elderly—who still rely on over-the-air analog broadcasting for their television reception. You can bet these politicians don't want to catch hell when their constituents' screens suddenly go blank. With most of the antenna and rabbit-ear users located in marginally red states like Nevada and New Mexico, as well as in solidly red Utah and the black and blue District of Columbia, these are voters not to be ignored or written off. D.C. voters don't get to vote in national elections, but do any of these politicians want to be in town when the sets go dark?

So Joe Barton's planned legislation would call for a "date-certain" cutoff, perhaps as early as the end of 2006 (preferred), or as late as 2010. It also calls for "potential consumer disruption" to be avoided through education and, more importantly, by providing a digital-converter-box subsidy for the estimated 50% of the 21 million OTA households on fixed incomes or below the poverty line.

Poor consumers would buy the box (projected to cost anywhere from $50 to $100), apply for a rebate, and get a check from the government within 30 days. Households above the poverty line would have to make the investment themselves. Total cost to the government was estimated to be between $400 million and $500 million, all of which would come from the billions of auction dollars.

Sounds like a good plan, right? It probably is, but there are a few sticking points involving the broadcast and cable industries, many of which were discussed in the first of two morning panel discussions. What about consumers owning multiple analog televisions? Will the government subsidize converter boxes for all of them, or just one?

Also, broadcasters must be coaxed into broadcasting DTV at full power. For now, while the number of digital channels and the reach of their coverage is extensive (though the rate of non-compliance is still high), many stations are broadcasting at minimal power to save money.

How shall cable providers offer the DTV local-channel broadcasts once there is no more analog? If they convert DTV to analog at the headend of their systems for their customers with analog sets, HDTV owners will not get local channels in HD, which is not acceptable. Cable must offer local programming in the same format as it was broadcast, while offering their analog customers a converter box. But who pays for it?

Panel Discussions
Participants in the first panel, "DTV Policy Transition," moderated by industry analyst Gary Arlen, discussed all of these issues and more. On stage were Rick Chessen, associate chief and chairman of the FCC's DTV Task Force; Rhett Dawson, president and CEO of the Information Technology Council; David Donovan, president of MSTV; Gary Shapiro, president and CEO of the Consumer Electronics Association; and Gigi Sohn, president and co-founder of Public Knowledge, a consumer watchdog group.

From left to right: Gary Arlen, Rich Chessen, Rhett Dawson, David Donovan, and Gary Shapiro. Not visible: Gigi Sohn.

Shapiro, clearly a man broadcasting on my wavelength, kept bringing up antennas, telling the audience that with all the new integrated sets out there, consumers need to be made aware of the antenna option, which brings free HD into homes. Amen. He pointed out that CEA has a website designed to educate consumers about OTA digital broadcasting and help them select the best antenna for their location.

The broadcast industry is loathe to return the bandwidth, and David Donovan, president of terrestrial-broadcast advocate MSTV and the sole industry spokesperson at the Summit, claimed consumers are against the cut off. But he presented no evidence to back this assertion or the other one he made that "interference" with DTV signals was making reception difficult for viewers near the Canadian border. Most participants ganged up on broadcasters, claiming they just don't want to give up the free electronic real estate, but it's clear they'll be doing just that in the next few years.

When that happens, most if not all of the current DTV frequency assignments will change, opening yet another Pandora's box of technical and political problems. Reception robustness and broadcast-power requirements (more power costs more money) vary by frequency as well. Who gets what frequency assignment in a given market must be decided now. Sorting this out will take at least a year, so the FCC will soon begin the process in anticipation of the legislation Barton hopes to introduce later this year.

"Sales Forecast," the second panel, featured Josh Bernoff, my "favorite" analyst, who sheepishly ate crow for being so wrong about HDTV. He then demonstrated just how little he understands about the subject he covers and why he makes such inaccurate predictions based on probably valid research.

Bernoff excused his original prediction about HDTV by citing big-screen TV research his company had done during the '90s. As he said (I'm paraphrasing here): "Big-screen television sales took off during the '90's and peaked at around 15% market penetration, because wives objected to having big, bulky sets. So we thought only a small percentage of new set buyers would want big DTV screens, and you need a big screen to get the benefits of HDTV."

Of course, if you analyze the data from a position of actually understanding the technology, you know that big-screen analog sets looked like crap, and the bigger you made them, the worse the picture looked. No wonder few people wanted big analog sets—especially women, who I believe are more picky about picture quality than men, as well as about having big ugly boxes in their homes.

With HDTV, the bigger the screen, the better the experience. That makes the trade-off of having a big box in the room far more palatable to women. In my opinion, the fact that the new technology has thinned way down and improved the form factor is secondary to the success of HDTV. The picture quality is selling it, and that's something Bernoff didn't bother to consider. Duh! "Never bet against quality!," I warned him when he originally predicted the failure of HDTV. His response? "You're starting to bore me."

The panelists prognosticated about the future of HDTV, but none of what was said was any more groundbreaking or risky than predicting that the sun will come up tomorrow. However, industry observer Phil Swann did come across as sanctimonious and self-important as he stated the obvious, the banal, and the well understood as if it was revelatory.

Lunch and the 5th Annual Academy of Digital Television Pioneers Awards presentation followed the morning's activities. For a complete list of award winners, go to the CEA Web site.