Tuesday, January 6, 2009

Digital TV Fiasco Hurts Stations, Aids Online Video

It turns out those pesky radio spots featuring Federal Communications commissioners warning consumers they might only see snow on TV sets without digital connections after Feb. 17 are prophetic. Human nature and government bureaucracy being what they are, it appears last-minute takers for $40 coupons subsidizing the cost of the digital converter boxes are out of luck. With more than 100,000 people on a waiting list for the coupons, the National Telecommunications & Information Administration (NTIA) says it has hit its statutory maximum of $1.34 billion in funding for the program designed to bridge the analog-to-digital gap.

Demand will exceed the NTIA’s authorized limit for 51.5 million coupons, leaving more than 8 million homes without signals and 11 percent of TV stations (about 196) reaching fewer people. Since the government already has raised $20 billion auctioning the 700-megahertz band to Verizon Wireless and AT&T, it is logical to assume funds are available to properly finish the converter coupon job.

This is no ordinary government folly. The digital transition that has been in the works for years now coincides with The Great Recession. Consumers who will not receive their $40 converter coupons in time have choices, all of which benefit big business. They can purchase full-price converter boxes, subscribe to cable or satellite, or invest in a new home digital television center, the FCC advises. Or, they can watch their favorite television programs, news and even commercials when they want to as streaming video online; a relatively cost-effective option that requires high-speed Internet access. Considering that consumers are viewing nearly 13 billion videos online monthly on sites such as YouTube, Yahoo and Hulu.com, according to comScore, the behavioral die has been cast.

A great unknown is whether a large portion of "unprepared" U.S. households will choose to watch TV content on computers, cell phones and PDAs. That puts the onus on television manufacturers to get smart connected interactive home hubs in place before consumers improvise and TVs go the way of land line telephones. Still, the biggest initial losers of this digital transition could be the TV broadcasters and viewers the program was designed to assist.

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