U.S. Jobs <i> and</i> Better TV’s? : HDTV Universal Standards: Political and Economic Pressures May Color Decision

As the Federal Communications Commission nears a decision on a universal standard for high-definition television, federal and state officials are pressuring the agency to choose a technology that produces the most U.S. jobs--not necessarily the best picture.

Labor Secretary Robert Reich, who is one of President Clinton’s closest advisers; Rep. Edward J. Markey (D-Mass.), chairman of a key congressional panel, and the governors of Indiana and Pennsylvania have urged the FCC to consider the employment impact of the HDTV standard it selects.

Several U.S. and foreign firms are promoting competing versions of HDTV, a digital transmission system that will enable television sets to display sharp, movie-like images with compact-disc quality sound.

Studies have estimated that HDTV could generate as many as 100,000 U.S. manufacturing jobs. Some U.S. job growth is likely no matter which group is chosen, but an emphasis on domestic employment could give the edge to a consortium that includes a French firm with a big plant in Indiana.

“I want to reaffirm my longstanding concern about the impact of this decision on American jobs and on the future growth of a broad range of information industries,” Markey wrote in an April 14 letter to interim FCC Chairman James H. Quello.

Reich telephoned Quello about the issue, and wrote in a letter that the selection of an HDTV standard “should turn, in part, on an assessment of which system would make the greatest contribution to domestic high-wage employment.”

The concern over jobs has surfaced at a time when the domestic economy is sputtering and U.S. consumer electronics manufacturing has all but disappeared. All videocassette recorders sold in the United States are made in Asia. Only one U.S. company, Zenith, makes television sets in this country.

Yet while potentially popular, the push to make job creation a key factor in choosing the HDTV standard introduces what is, to some, a troubling political dimension.

“Ideally, you want the best technology standard set here first. You wouldn’t want the Food and Drug Administration not to allow the best drugs to be used in the U.S. because an inferior drug created more jobs,” said David Cheney, a senior associate of the Council on Competitiveness. Such a policy might encourage other countries developing new technologies to retaliate, Cheney said, much the same way countries get involved in trade wars.

FCC Commissioner Ervin S. Duggan expressed similar concerns. While the FCC “cannot be heedless of the jobs issue,” he said, “the letters introduce an unusual political element in what should be a technical decision.”

Richard E. Wiley, chairman of the FCC’s HDTV Advisory Committee, said that until now jobs “had not been a selection criterion.” But in response to the letters raising the issue, the committee is preparing to send questionnaires to the three groups developing HDTV systems to try to determine how many U.S. jobs each system might create. The jobs issue will also be examined by Markey’s subcommittee.

During the mid-1980s, Japanese manufacturers briefly jumped to the forefront of HDTV technology, rushing pricey high-definition sets to market in their country. But the United States catapulted ahead in 1990, when American engineers found a way to send video images using digital rather than distortion-prone analog technology.

The FCC is testing four digital HDTV systems being promoted by three groups. A final decision is due late this year. But at the insistence of Wiley’s advisory committee, the HDTV rivals have been meeting to discuss building a single HDTV system.

Those talks had been going smoothly before the job controversy arose, said Quincy Rodgers, director of government affairs for General Instruments Corp., one of the HDTV developers. Quincy said he now fears that the debate over employment “might represent a desire on the part of some people to torpedo the negotiations.”

The FCC, which oversees the $300-billion-a-year telecommunications industry, has long been a hotbed of political infighting. But the HDTV debate involves an unusually influential group of political figures, and could further delay the introduction of a technology that the FCC has been analyzing since the mid-1980s.

“Intervention by the government could change the nature of the 5-year-old HDTV standard-setting process from a technology competition to a political process,” General Instruments Chairman Donald H. Rumsfeld warned in a March 5 letter to Reich. “As you can well imagine, there is no incentive for a company to spend still more money for the retesting required by the FCC Advisory Committee if the rules are to be changed at this late date.”

There is even some question as to whether anyone can predict if one system will generate more domestic employment than another.

“The choice of any one of the four systems will not have any impact whatsoever on where anybody makes any television sets,” said Jerry K. Pearlman, chairman of Zenith Electronics Corp., which is participating with AT&T; in promoting another HDTV standard. “These sets are large and heavy, and it is unlikely that many will be made overseas.”

Ironically, Zenith raised the issue of employment impact more than a year ago, suggesting that job creation could be affected by the way HDTV is licensed to manufacturers after a standard is chosen. The firm petitioned the FCC to approve an HDTV domestic content rule or a dual licensing structure that “would offer a substantially lower royalty rate to firms that utilize HDTV components made in the U.S.” The FCC never acted on the request.

Under current rules, the group whose system is chosen would get royalties from other manufacturers licensed to make equipment based on the standard technology. The winner would have to license the technology to foreign and domestic companies on a non-discriminatory basis.

Paul Misener, executive director of the FCC’s advisory committee, said that two systems performed significantly better in picture quality tests that concluded last December.

One was sponsored by the General Instruments-MIT team. The other was developed by an international consortium made up of Philips Electronics of the Netherlands, Thomson of France and two U.S. firms: Compression Labs Inc. and NBC.

Some observers say the debate over jobs can help the international group because Thomson maintains the world’s largest color TV plant, located in Bloomfield, Ind.

Indiana Gov. Evan Bayh declared his support for Thomson in a letter and phone call to Quello. Pennsylvania Gov. Robert P. Casey, after touring a Thomson picture tube plant in Dunmore, Pa., also urged the FCC to select the consortium.

“HDTV is more than just the greatest leap in television technology in 40 years,” Casey said. “HDTV means jobs.”

The HDTV Contenders

A European-led consortium and two U.S. development teams are vying for approval of a new U.S. high-definition television standard. The Federal Communications Commission will decide which system offers the best combination of attributes, such as image quality and ability to survive signal interference.

Although they differ in several respects, each system features one of two basic video displays. Two are interlaced systems in which the electron beam skips every other line on each pass down the face of the picture tube. Two are sequential systems that scan every line on every pass. Interlaced systems give TV pictures a telltale flicker, but tend to have greater apparent resolution than sequential systems.

* The Advanced Television Research Consortium is offering Advanced Digital HDTV, an interlaced television scanning system with 1,050 lines of video resolution. The system is one of two found to have high picture detail in FCC tests last year. The consortium is made up of Philips Electronics of the Netherlands, Thomson of France and U.S. firms Compression Labs Inc. and NBC.

* General Instruments Corp. and the Massachusetts Institute of Technology are offering two HDTV technologies. The first, DigiCipher HDTV, offers 1,050-line interlaced scanning and has demonstrated great picture detail. The second, Channel Compatible DigiCipher, transmits an HDTV picture sequentially, with resolution of 787 lines.

* AT&T; and Zenith Electronics Corp. are offering Digital Spectrum Compatible HDTV, a sequential scan system that transmits an HDTV picture with 787 lines of resolution.