U.S. Edge in HDTV Now in FCC’s Lap : Electronics: Regulators next month may select a standard from among five American systems. Some challenge the need for a speedy decision.

Back in 1987, when the Federal Communications Commission launched an unusual competition to choose a technical standard for the next generation of televisions, the U.S. electronics industry appeared to be nowhere when it came to advanced TV.

The Japanese dominated the world market for TVs, VCRs, camcorders and stereos, and for nearly two decades had been perfecting a high-definition TV system to bring cinema-quality pictures to the living room. American companies, it seemed, would be left with the scraps of a new, multibillion-dollar HDTV market.

But today, as the FCC competition enters its final phase, the picture looks entirely different. Technical breakthroughs--spurred in part by the FCC competition--have vaulted U.S. companies into a leadership role not only in HDTV, but also in related digital TV technologies that could prove equally important. At the same time, HDTV efforts in Europe and Japan are foundering amid indications that HDTV won’t find a broad market for as long as a decade.

“The U.S. was nowhere, and now we’re leading the world; we’ve caused the Europeans and the Japanese to totally rethink this thing,” says Richard Wiley, chairman of the FCC’s HDTV advisory committee. “The U.S. has shown that it can bring to the market some very sophisticated systems.”

Wiley’s panel now faces a delicate choice that could help determine whether the United States can capitalize on its newfound lead in advanced television. Next month, it will decide whether to choose an HDTV standard immediately--based on the results of 18 months of technical tests on five HDTV systems--or delay the process to give the major contestants more time to tinker with and improve their systems.

The issue over whether to delay the FCC decision has sparked an intense lobbying effort between the contestants. Not surprisingly, companies whose systems did not perform well in the tests--notably a consortium of American Telephone & Telegraph and Zenith Electronics--are pushing for a delay. Those that did better--General Instrument Corp. and a consortium that includes NBC Television and the European electronics giants Philips and Thomson--want an immediate decision.

The stakes are high. If its technology is adopted as a standard, the winning contestant gets to collect royalty payments on HDTV equipment, including the TV sets themselves and the broadcasting gear needed to send HDTV signals. That could be worth tens of millions of dollars a year.

In addition, the winner will get a boost in selling a broad variety of advanced video equipment. The big breakthrough that U.S. companies have achieved in HDTV research--replacing the analog wave form of traditional TV with the ones and zeros of computer code--has applications for a wide range of advanced electronics products and services.

Indeed, “digital video compression” technology enables cable TV systems to offer as many as 500 channels by squeezing more information through the same conduit. It also enables personal computers to show video along with text and graphics, and to store video on compact disks.

General Instrument, which led the move to digital technology, says a quick decision on an HDTV standard will accelerate the move to digital video and assure that the United States maintains its lead. And Bob Rast, head of General Instrument’s HDTV program, argues that fairness alone dictates that the FCC stick with its original ground rules: “We performed well, and now people want to deny us the fruits of our victory.”

But the push to delay the FCC’s decision and allow more extensive testing isn’t simply sour grapes on the part of companies that performed poorly. All the companies rushed to complete their systems by the deadline--and all have various ideas for improvements.

“We’re going to have a standard that will last 30 or 40 or 50 years, and there are people who are saying that we can’t stand a delay of two or three months,” says Robert Graves, an AT&T; vice president. “That doesn’t make much sense.”

Computer manufacturers, meanwhile, have long argued that the FCC should not rush to set an HDTV standard. They want a comprehensive system that could link everything from very high resolution computers to simple video game machines. Some also believe that the HDTV system should be based on an emerging digital video standard called MPEG. That would improve the chances of the U.S. system eventually becoming a world standard--but would probably mean more delays.

“My hope is the process will be delayed a little, maybe six months,” says Russell Neuman, a professor at the Massachusetts Institute of Technology’s Media Lab. “I don’t think these test results are as definitive as people think they are. They’re testing prototypes.”

TV broadcasters are in no big hurry to move ahead with HDTV. The key goal of the FCC competition was development of a system that would work within the broadcasting frequencies already allocated for television. That way, broadcasters wouldn’t lose out to cable or satellite operators in the switch to HDTV--or see new HDTV broadcast frequencies granted to somebody else.

But broadcasters are not eager to spend the hundreds of millions of dollars that will be necessary to bring HDTV to viewers, and some small TV stations may not be able to afford to make the switch. And the FCC process has virtually frozen all other HDTV development and assured broadcasters of control over crucial frequencies, thus eliminating some of their incentives for moving ahead quickly.

TV viewers may not be in a huge hurry either. In Japan, where one channel of HDTV is now being broadcast via satellite, consumers have been reluctant to spend up to $10,000 on HDTV sets--a sign that HDTV may catch on much more slowly than once anticipated.

Even if the FCC does move quickly toward a standard, there is no guarantee that American companies will dominate the HDTV equipment market. Japanese consumer electronics firms are poised to manufacturer equipment to any specification, even if they have to pay royalties to a U.S. inventor.

Few are willing to predict what the FCC will decide. And there is added uncertainty because the commission’s members will change with the arrival of the Clinton Administration. Al Sikes, who has spearheaded the process until now, recently resigned as chairman of the FCC, and no one knows what a Clinton-era commission will look like.

But all eyes will be on the February advisory committee meeting. Observers expect the committee to either recommend a winner, or to call for additional testing of two or three systems. The FCC will probably go along with the recommendation.