Transition to DTV Will Allow the Return of Valuable Spectrum but Will Require Millions of Americans to Buy New Equipment

One important goal of the DTV transition is to recapture portions of the radiofrequency spectrum currently used for analog broadcasting so this spectrum can be used for public safety needs and auctioned to private companies. Date When DTV Transition Will Be Completed and Spectrum Returned Is Uncertain

FCC established 2006 as the target date for completing the DTV transition, and this was later codified by Congress in the Balanced Budget Act of 1997. Under the statute, FCC must grant extensions to requesting stations in a television market where it finds that one of the following three conditions exists: 1.  at least one television station affiliated with the four largest national networks (ABC, CBS, Fox, or NBC) is not broadcasting a DTV signal; 2.  the technology to convert a digital signal for use on an analog television set is not generally available; or 3.  fewer than 85 percent of television households in the television market has the ability to receive DTV—a television household would not count as receiving DTV if it (a) did not subscribe to a “multichannel video programming distributor” (such as a cable or satellite service) that carries a digital broadcast channel from each broadcaster in that market and (b) did not have a television receiver or a digital-to-analog converter capable of receiving digital broadcast signals. Consumer Adoption of DTV Has Been Slow, Partly Because Many Americans Are Unaware of the Transition and Are Not Well Informed about DTV Products

In a telephone survey of 1,000 randomly selected American households, we found that many people have little understanding of the DTV transition and its implications. When we posed as consumers during visits to 23 DTV retailers, we found that much of the information provided by sales staff about DTV equipment was correct. For example:   Forty percent of respondents said they had never heard about the transition to digital broadcast television, and another 43 percent said they were only “somewhat aware” of the transition. They also were generally accurate in explaining what equipment would be needed to receive digital signals. Carriage of Digital Signals by Cable and Satellite Operators Is Insufficient to Help Achieve 85 Percent Threshold Quickly

On the basis of current plans for digital carriage by cable and satellite companies, it appears unlikely that many households will have access to all of their local digital channels via cable or satellite by December 2006. FCC Has Tentatively Decided Against Mandatory Dual Cable Carriage

Under the Cable Television Consumer Protection and Competition Act of 1992, local commercial broadcast stations have the right to require that cable systems in their market carry their analog signal. This completes a circle: with few consumers owning digital television sets, and little digital programming available, few cable systems have any incentive to carry local digital signals. Digital Over-the-Air Tuners Have Been Mandated, but Digital Cable-Ready Capability Has Not

To speed the DTV transition, FCC has adopted an order requiring that by 2007 most new broadcast television sets include a tuner capable of receiving digital signals over the air. Another policy option would be to pair the over-the-air mandate with a requirement that new television sets also be digital cable-ready. Because many more American households receive television via cable than receive it over the air, mandating digital cable-ready capability could be an effective policy for speeding the DTV transition if the marginal cost of this requirement were found to be reasonable. In addition, outstanding cable compatibility issues would need to be resolved before a digital cable-ready mandate could be implemented. Another policy option related to DTV that we have identified is to set a date-certain when broadcast stations’ right to invoke a must-carry status for their stations’ signals would transfer from their analog signals to their digital signals. As such, this policy would need to be evaluated more closely. This report acknowledges FCC’s efforts to resolve issues related to the compatibility between digital television sets and cable systems.
Why GAO Did This Study

The transition to broadcast digital television (DTV) will provide new television services and the improved picture quality of "high definition television." It will also allow some portions of the radiofrequency spectrum used for broadcasting to be returned for public safety and commercial uses. The Congress set December 2006 as the target date for completing the DTV transition and turning off the analog broadcast signals. However, this date can be extended if fewer than 85 percent of households in a market are able to receive the digital signals. GAO was asked to assess issues related to the DTV transition.

What GAO Found

Numerous factors are impeding the progress of the DTV transition, making it unlikely that 85 percent of households will be able to receive DTV signals in many markets by December 2006. Few consumers own digital television equipment. Only about 1 percent of television equipment sold in 2001 could receive digital signals. This is largely because digital television sets and tuners are expensive and high definition programming is limited. Many consumers are unaware of the DTV transition. In a random household survey conducted for GAO, 40 percent of respondents had never heard about the transition; only one in five were "very aware" of it. In addition, the quality of information that consumers receive about DTV products at the retail level may be inconsistent. In visits to 23 DTV retailers, GAO found that sales staff sometimes provided inaccurate or incomplete information about DTV equipment and programming. Cable and satellite digital carriage is limited. The great majority of American households receive their television via cable or satellite. However, cable carriage of local digital broadcast channels is very limited. Furthermore, satellite providers currently do not carry any markets' local digital broadcasts. To speed the DTV transition, the Federal Communications Commission (FCC) has required that by 2007 most new television sets be capable of receiving digital signals over the air. Another policy option to speed the transition would be to also require that new sets be capable of receiving digital signals via cable. Because many more American households receive television via cable than receive it over the air, mandating that new sets be "digital cable-ready" could effectively speed the transition. However, the cost to consumers of such a policy would first need to be assessed, and outstanding issues related to the compatibility between cable systems and DTV equipment would need to be resolved. Currently, broadcast stations have the right to require that cable systems in their market carry their analog signals (a right known as "must-carry"). One policy option to facilitate the transition would be to set a fixed date when this must-carry right would transfer from broadcasters' analog signals to digital signals. This option might speed cable carriage of digital broadcasts without requiring cable systems to carry both analog and digital broadcasts simultaneously. Because such a policy could have both advantages and disadvantages, it needs to be carefully evaluated.