Still Waiting as Shift to Digital TV Struggles

Make no mistake, Matt Stevens loves his new digital television. “It’s the best thing I’ve ever bought,” the independent filmmaker from New Haven, Conn., said.

His $2,000, 47-inch wide-screen Panasonic was one of the least costly high-definition sets on the market, yet it delivered a super-sharp picture and cinema-quality sound--as long as Stevens was watching DVDs.

To watch high-definition broadcasts from his local TV stations, he had to spend an additional $750 on a digital receiver. He covered the cost by selling some of his vintage comic books.

But he soon discovered that CBS’ local digital station, which offers the most prime-time programs and sports in HDTV, was too weak to tune in to over the air, and it wasn’t carried on cable or satellite. The local NBC and Fox stations in Connecticut, meanwhile, hadn’t even begun broadcasting in digital.

All this was bad news but not a deal-killer for Stevens, who had no trouble tuning in to the local ABC station’s digital channel. After all, the main reason he’d bought the receiver was to watch the series of 13 James Bond movies ABC was running in HDTV, the highest-quality form of digital broadcasting.

“Of course, just as I got [the receiver], they canceled the movies,” Stevens said ruefully.

The reason? Lousy ratings.

Stevens’ plight illustrates why so few consumers are tuning in to their local stations’ digital channels, and why the broadcasters’ federally mandated shift from analog to digital is still sputtering after five years and hundreds of millions of dollars.

Digital TV has made so little headway with the masses that a top federal regulator tried to light a fire under the industry last week by proposing a new set of “voluntary” deadlines. Meanwhile, more than 80% of the commercial TV stations are about to miss a real federal deadline for launching their digital channels.

The expensive sets and the shortage of HDTV programming, particularly on cable and satellite, have left the digital stations with only a cadre of determined viewers such as Stevens. There are about 2.7 million digital sets in the U.S., and only 10% of them can tune in to digital broadcasts. That compares with more than 250 million traditional analog sets nationwide.

The tiny audience for digital puts broadcasters, whose annual convention begins today in Las Vegas, in a bind. The federal government has ordered them to start making the shift away from analog broadcasting, but they can’t build new digital businesses without viewers.

“We are replacing every consumer set in America, and that is a long-term process no matter how you slice it, how you promote it,” said Edward O. Fritts, the National Assn. of Broadcasters’ chief executive.

The government-mandated transformation of television began in 1987, when Japanese advancements in broadcasting led policymakers to call for a U.S. response. With the broadcasters’ and set manufacturers’ support, the Federal Communications Commission eventually adopted a digital alternative that stations could use for a range of services, including HDTV, multiple simultaneous channels, high-speed data transmissions and interactive programming.

Digital technology was supposed to change the way people watch TV. In addition to sharper pictures, broadcasters would be able to offer extras with every program: alternate camera angles during a game, for example, or downloadable soundtracks to movies.

Digital broadcasters don’t use the same technology that the cable and satellite companies do in their digital offerings. The cable and satellite operators use digital to change the way pictures and sound are sent to conventional TV sets, while the local stations use digital to change the nature of the picture itself. That’s why consumers need a digital TV to watch the new local channels in their full quality.

It’s also why the FCC loaned each local broadcast station a second channel in April 1997 so it could gradually shift its programs from analog to digital. All 1,300 commercial broadcasters had to put their digital stations on the air by May 1, 2002, and all analog channels had to be shut down by the end of 2006.

So far, 273 commercial and public broadcasting stations have launched their digital channels. But more than 800 commercial stations have sought extensions to the May 1 deadline, and about 100 more don’t even have construction permits yet.

Unless the transition picks up speed in a hurry, the federal government will have to wait to reclaim and auction the airwaves now being used for analog channels. Critics such as former FCC Chairman Reed Hundt predict it will take 20 years or more to clear those channels.

The cost: upward of $70 billion in revenue lost because the publicly owned spectrum could not be auctioned off for other uses, such as high-capacity wireless networks.

Proponents note that the digital rollout has been strong in large cities, with more than 80% of the population being reached by at least one digital channel. In Los Angeles, 10 digital channels are on the air, including all the major network affiliates and two public broadcasting stations. Fritts also says that “the large majority” of the stations seeking extensions will have their digital channels running by the end of the year.

On the manufacturing side, more than 400 types of digital TVs have been developed, and about 2.7 million sets have been purchased. The average price of those sets has fallen more than 40% in three years, and it’s expected to drop further as sales increase. Much to the broadcasters’ chagrin, though, only 10% of the homes with digital sets also have a digital receiver.

To address that issue, several stations plan to test a low-cost digital converter from Wow Digital TV of Salt Lake City. The converter, expected to sell for less than $200, enables consumers to watch the broadcasters’ digital channels on conventional TVs in DVD quality. It also will be able to deliver interactive services, such as traffic cameras, local weather updates and sports highlights on demand.

Darrell Brown, vice president and general manager of KGTV in San Diego, said his company has spent $3.5 million putting a digital channel on the air with no new revenue to show for it. “The Wow Digital system,” he said, “seems to have the most realistic chance of creating any kind of revenue stream.”

Other recent developments suggest that the digital transition is picking up steam.

Several top cable operators disclosed plans to carry digital stations in a dozen cities, doubling the current number of communities served. Mitsubishi Digital Electronics America announced Saturday that it has stopped making analog TVs, committing itself totally to digital sets. And the amount of digital programming continues to increase, with DirecTV planning to carry an additional entertainment channel in HDTV this quarter and NBC officials saying they’ll broadcast all their new prime-time shows this fall in HDTV.

Hoping to accelerate the pace of change, FCC Chairman Michael Powell on Thursday called for more HDTV and other enhanced digital programming from the top networks this fall. He also urged cable and satellite services to bring these digital services to 75% or more of the country by January, and set manufacturers to start putting digital TV tuners in at least half their big-screen sets by the following year.

If the voluntary deadlines aren’t met, the FCC may adopt new mandates to boost the transition, the chief of the FCC’s media bureau said last week. Powell’s deadlines don’t address one other, critical stumbling block for the digital transition. Set makers, cable and satellite companies and Hollywood studios are still struggling over how to connect the new TVs digitally to cable or satellite services without risking incompatibility, promoting piracy or restricting consumers’ rights to copy programs for personal use.

The vast majority of today’s digital sets don’t even have digital connectors, making some owners such as Stevens worry that they’ll lose access to premium HDTV shows. One consequence of the wrangling is that most digital sets offer no way to record HDTV programs, making them less appealing to consumers.

Despite the equipment woes, entrepreneur Mark Cuban, who made billions on Internet broadcasting, believes the appeal of HDTV will help TV stations win larger audiences eventually and recover their investment. One of Cuban’s current ventures is HDNet, a satellite TV channel offering sports and other programming in high definition.

“People with HD [sets] want to watch HD and they do,” Cuban said in a recent e-mail to The Times. “This translates into programming in HD on HD broadcasting stations getting better ratings and the financial rewards that come with better ratings, simply because they are in HD.”

Martin Franks, an executive vice president of CBS and a strong HDTV advocate, agreed. “Digital,” he said, “gives us a chance to differentiate our programming from the fourth food network. The ability to offer it in wide screen and high definition helps to make broadcast programming special again.”

Associated Press contributed to this report.