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The Digital Transition: The Rubber Meets the Road IOWA June 28, 2007

The Digital Transition: The Rubber Meets the Road IOWA June 28, 2007. DTV: Rubber Meets the Road The Deadline. Full service analog TV stops: February 17, 2009, at 11:59PM and 59 seconds LPTV, Class A and Translator Stations may continue analog operations Economics may require you to move.

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The Digital Transition: The Rubber Meets the Road IOWA June 28, 2007

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  1. The Digital Transition:The Rubber Meets the RoadIOWAJune 28,2007

  2. DTV: Rubber Meets the RoadThe Deadline • Full service analog TV stops: February 17, 2009, at 11:59PM and 59 seconds • LPTV, Class A and Translator Stations may continue analog operations • Economics may require you to move

  3. 129 Weeks Until the End of the Transition 600days

  4. Auctioned for wireless services & public safety use

  5. DTV: Rubber Meets the RoadThe Deadline • Date Unlikely to Change • Spectrum (channels 52-69) will be auctioned • Budget imperatives in Washington • Pressure from auction winners • Public safety (channels 63, 64, 68 & 69) • Homeland security • Interoperability with police and fire • Consumer education campaign

  6. DTV: Rubber Meets the Road • Can the entire analog system turn off on February 17, 2009? • Are we ready? • What needs to be done?

  7. DTV: Rubber Meets the Road • Alternative “phase-in” market-by- market may be problematic • Interference to surrounding stations • Supply of equipment and tower construction crews • Consumer demand and supply of DTV receivers and digital-to-analog converter boxes

  8. DTV: Rubber Meets the RoadMajor Hurdles • Regulatory Status • FCC and NTIA • Station Coordination • Station must wait for another station in its market or adjacent market to move before moving to final channel • Move early may interfere with surrounding stations • Equipment Demand and Supply

  9. DTV: Rubber Meets the RoadMajor Hurdles • Regulatory Status • DTV Tuner Rules & DTV Set Supply • NTIA Converter Box • Channel Election Process • Third (Periodic) Biennial Review • Analog power reduction • Side mount Issues • Digital Carriage Issues

  10. DTV: Rubber Meets the RoadRegulatory Status - FCC • DTV Tuner Rules Effective March 1, 2007 • Estimated 110 million sets with tuners by 2009 • 2007-2009 expect sales of 60 million sets and set-top boxes with tuners • 2002 – 2006 50 million sets and set-top boxes sold • DTV sets outsold analog by 57% in 2006 • HDTV sets sold 11.2 million in 2006 • HDTV penetration 30% (cable and satellite) • Antenna sales increasing (Source: CEA/LG)

  11. DTV: Rubber Meets the RoadRegulatory Status – DTV Tuners • Prices Dropping (projected 2007) • All DTV 26.7 million units @ $819 (avg.) • LCD 11.2 million units @ $742 (avg.) • Plasmas 2.9 million units@ $1,499 (avg.) • Digital Projection 2.4 million units @ $1,352 (avg.) • Digital Direct View (CRT) 6.6 million units @ $303 (avg.) (Source: CEA)

  12. DTV: Rubber Meets the RoadRegulatory Status – DTV Tuners • New Labeling Requirement for Analog-Only Sets: This television receiver has only an analog broadcast tuner and will require a converter box after February 17, 2009, to receive over-the-air broadcasts with an antenna because of the Nation’s transition to digital broadcasting. Analog-only TVs should continue to work as before with cable and satellite TV services, gaming consoles, VCRs, DVD players, and similar products. For more information, call the Federal Communications Commission at 1-888-225-5322 (TTY: 1-888-835-5322) or visit the Commission’s digital television website at: www.dtv.gov.

  13. DTV: Rubber Meets the RoadRegulatory Activity - NTIA • NTIA Converter Subsidy Box Program • Consumer Coupons • Two coupons per family • Each coupon worth $40 (no cash value) • Can only be used for eligible converter box • Request and redeemed between January 1, 2008, to March 31, 2009 • Expires 3 months after issuance • Electronically traceable (like gift cards) • Transaction verified point of sale

  14. DTV: Rubber Meets the RoadRegulatory Activity - NTIA • Converter Box Program • Funding total $1.5 billion • Split Funding • First $900+ million for all consumers • $500+million for OTA homes if needed • Dispute in Congress Over Funding • Nearly 70 million over-the-air only sets • Amount funds about 33 million set-top boxes

  15. DTV: Rubber Meets the RoadRegulatory Activity - NTIA • Converter Box Disqualifying Features • Digital-to-Analog Only: Any device which does more than convert over-the-air digital signals to analog does not qualify • No Additional Features: VCR, DVD, HDDVD, Blue Ray, etc. • No Digital Outputs: No DVI, Component Video (YPbPR), HDMI, (VGA), USB IEEE-1394, Ethernet (IEEE-802-3) or Wireless (IEEE802.11) • Can’t sell if conditioned on purchase of additional equipment (e.g., smart antenna)

  16. DTV: Rubber Meets the RoadRegulatory Activity - NTIA • Required Features for Converter Boxes • Minimum quality standards (A-74+) • Receives channels 2-69 • Permitted Features for Converter Boxes • Electronic program guide (PSIP based) • Smart antenna interface • 300 OHM connector • NTSC “pass-through” switch • S-video output • Stereo capability • Software modifications

  17. DTV: Rubber Meets the RoadRegulatory Activity - NTIA • Permitted Features for Converter Boxes • Programmable universal remote • Direct keys to provide access to closed captioning • May operate on battery power • May provide additional cable such as RCA connectors • May display signal quality information • May comply with EPA Energy Star Requirements • “Family” of Set-top Boxes with DTV Tuners

  18. DTV: Rubber Meets the RoadRegulatory Activity - FCC • Channel election process complete • New DTV table released for public comment: Seventh Further Notice, MB Docket No. 87-268, FCC 06-150 (October 20, 2006) Table in Appendix B Important! • LPTV digital window opened last year. FCC will decide soon

  19. FCC: Third Biennial ReviewBuild-out Status • 1702 Stations in All Markets Have CP (98%) • 1603 Now Broadcasting • 1215 licensed or program test authority • 388 with STA • Top 30 Markets • 119 top four networks on the air (9 STA) • Market 1-10: 40 top four networks (2 STA) • Market 11-30: all 79 top four networks (4 STA) • 752 Stations Ready to Complete Transition

  20. FCC: Third Biennial ReviewRules to Guide the Transition • Focus on Construction of Post Transition DTV Facilities • Rules Differ Based on Categories • Stations remaining on DTV channel (1178) • Stations going back to analog channel (517) • Stations getting new channel (117) • Stations that will flash cut (137)

  21. FCC: Third Biennial ReviewMajor Issues • Status Report Form: December 1, 2007 • Reduction and termination of analog service • New flash cut proposal • Construction and “Use It or Lose It Rules” • Ability of stations to transition early

  22. FCC: Third Biennial ReviewMajor Issues • Alternative build-outs • Continued use of temp DTV channel • Channel priority • Rules & procedures for CP and license to cover • Request to expand facilities • Interference standards • Changes in receiver requirements • PSIP • Station identification • Coordination with other services

  23. FCC: Third Biennial Review • Reduction and Termination of Analog Service: Current law expanded • Out-of-Core Band Clearing Agreements • Extends relaxed rebuttable presumption to all out of core channels 52-69 • In-Core Analog Service (case by case) • Reduction in service • Early termination of service

  24. FCC: Third Biennial Review • Reduction of “In Core” Analog Service • Presumption (proposed criteria) • Reduction is directly related to construction of DTV facility and would ensure that station met the deadline • Less that 5% of service area or population served • No loss top four networks or NCE service • No unreasonable loss of number of services, e.g., fewer than 5 full power signals • Deliver signal to cable or satellite • Commits to on-air education campaign • If criteria not met, case by case • Should FCC allow increased analog loss closer to transition • Deliver to cable and satellite headends • Commit to on-air campaign

  25. FCC: Third Biennial Review • Digital side mount, analog top mount • May allow a station to keep digital side mount, providing it meets 100% of replicated coverage area • If so the, station can wait until Feb 17, 2009, to move to digital to top mount and operate at full facilities • Focus on how much of replicated coverage area served by side-mounted digital • FCC will consider reduction in analog service if it is necessary to have digital service on or after transition • Solution may not work for many stations

  26. FCC: Third Biennial Review • Termination of In-core Analog Service • Apply a stricter standard to early termination • Consider factors mentioned above • Is reduction an acceptable alternative? • Look at loss of service, e.g., top-four affiliates, loss of only NCE, reduction in signals below five, etc.

  27. FCC: Third Biennial Review • Flash Cut Requests ( Early Return of Pre- Transition DTV Channel) • Is DTV channel out-of-core (52-69)? • Is station a top-four affiliate? • Is pre-transition channel allotted to another station for post transition use? • Financial hardship? • Concern: Public interest in turning off your digital channel

  28. FCC: Third Biennial ReviewConstruction Extension • Construction Deadline Order • FCC granted 140 requests for extension of time to construct • 107 stations which will stay on channel have an additional 6 months • 29 stations who are moving have until 30 days after new rules adopted in Third Periodic • 4 stations facing unique challenges (side mounts) • 5 requests denied • New construction permits must build checklist facility that conforms to DTV table

  29. FCC: Third Biennial Review • Going Forward Construction Rules For Stations Changing Final DTV Channel • No further construction of temp DTV channel required! • Feb 17, 2009, construction deadline for final DTV facilities • Must file new construction permit and build facilities based on DTV Table in Appendix B

  30. FCC: Third Biennial Review • New Standards for Future Waivers of DTV Construction Deadline • Old Standard: (1) zoning, FAA clearance; (2) lack of equipment; (3) costs exceed financial resources • New Proposal: Eliminate lack of equipment criterion • New Proposal: Revise financial justification to (1) bankruptcy or (2) severe financial hardship (audited) • New Proposal: Consider requests where a station is waiting for FCC, court or international action or actions beyond stations control

  31. FCC: Third Biennial Review • Post Transition Extension of Time Waivers • Filing modification will not toll construction deadline • Apply “Tolling Standard” • Act of God • Grant subject to administrative or judicial review • Delay because of pending court action (e.g., zoning) • Must notify FCC • International delays not grounds for delay, except: • Request sent to Canada and Mexico and no response • Protecting Mexican or Canadian DTV would not allow US station to serve viewers currently served by analog community

  32. FCC: Third Biennial ReviewUse It or Lose It Order • Use It or Lose It: Interference Protection Carry Over to Final DTV Channel • Use It or Lose It Order • 102 stations staying on channel; they get extra 6 months from release of the Order • 30 stations moving to final channel, get an extension to 30 days after decision in third DTV review • Further waiver requests subject to stricter standards

  33. FCC: Third Biennial Review • Going forward “use it or lose it” rules for stations changing channels • Stations granted waivers will not lose interference protection • If unbuilt, turn in digital channel to FCC and flash cut • If DTV channel is operational • Discontinue further construction • Cease operating temporary DTV facility and obtain flash cut authority • Stations that wish to continue to build may do so, but must meet construction deadlines • 7 Stations denied use it or lose it waiver: Since focus is on final channel, FCC will reevaluate

  34. FCC: Third Biennial Review • Applications/modifications for stations remaining on their current DTV channel • Station facilities that do not match facilities in table must file CP modification or new CP application • Stations operating on STA or have not built full facilities must compete construction and may have to apply for new CP or modification • Stations that do not want to build to full facilities must modify CP or license

  35. FCC: Third Biennial Review • Early Transition • Can stations moving to third channel commence operations before Feb 17, 2009? • What would constitute impermissible interference? • 2% to analog TV • Cannot cause additional interference to post transition stations • May operate on less then full authorized facilities

  36. FCC: Third Biennial Review • Temporary Use of In-core DTV Channel • Can continue to use in-core DTV and not move to final in-core channel, provided: • Serve same area and population that receives current analog TV and DTV service • Do not cause impermissible interference to other stations (0.5% to other post transition stations) • Request made via the STA process • How long should this continue? Alternative Build-out • Permit stations to request STA, build less than full stations, provided they serve the same population area of their analog station • STA Build-out • Permit stations to request STA, build less than full stations, provided they serve the same population area of their analog station

  37. FCC: Third Biennial Review • Channel Priority • If conflicts, stations should coordinate • Authority to operate on channel must be consistent with appendix B as of February 17, 2009

  38. FCC: Third Biennial Review • Application to construct or modify • FCC only accepts modifications for facilities specified in DTV table • Will not accept applications/modifications to expand facilities at this time • Seek comment on whether this can be done without delaying the DTV transition • Will allow later on • Impacts equipment purchases

  39. FCC: Third Biennial Review • Expedited Processing • Stations obligation to timely file • FCC will process within 45 days of the rules adopted in Report and Order • Does not seek expansion beyond Table • Does not deviate from Table more than 0.5% • Process within 10 days of filing • Does not mean expedited grant

  40. FCC: Third Biennial Review • Program Test/License to Cover CP • Must not commence tests until ready to begin post transition operations under program test authority • Coordinate with affected stations • Upon completion of construction as authorized by CP, may commence program test upon notification to FCC, provided license to cover From 302 is filed within 10 days

  41. FCC: Third Biennial Review • Pre-transition interference standards • Applications for analog and new DTV stations will be processed consistent with the freeze rules • Retain existing interference standards • Analog: New or modified analog application may cause no more than 0. 5% to DTV stations or allotment • Digital: 2%/10% rule for new DTV station interference to analog station, DTV station or digital allotment • OET 69 using 1990 Census data

  42. FCC: Third Biennial Review • Interference Standards for Post Transition Modifications/Applications • Use engineering criteria for permissible interference (not geographic separations) in applications • 0.5% of protected stations service contour • Nor necessary to have a 10% cap • No increases allowed where amount currently exceeds 0.5% • OET 69 analysis with 2000 census data • Should FCC use variable D/U ratios for adjacent channel interference? • Use geographic spacing for new DTV to DTV allotments and changes to the table

  43. FCC: Third Biennial Review • Going Forward Interference Protection • Protect to parameters of Table B until station has a CP or license for post transition operation, at which point interference is limited to authorized coverage area • Maximization requests must protect new DTV Table Appendix B

  44. FCC: Third Biennial Review • DTV Transmission Standard A/53-E • Should broadcasters be required to use Active Format Descriptors? • Rules do not require AFD • If AFD is sent, it must meet ATSC • Specifications for enhanced VSB • Higher immunity rates for certain channel impairments • Improves Active Format Description (AFD)

  45. FCC: Third Biennial Review • Program System Information Protocol (PSIP) A/65-C • Should broadcasters be required to populate Event Information Tables? • Is PSIP information being passed through to cable and satellite subscribers?

  46. FCC: Third Biennial Review • Station Identification • Stations required to identify the main channel • Are rules sufficient with multiple program streams? • Coordination With Other Multi-channel Video Providers (MVPD) • Issues related to MVPD readiness • Can MVPDs receive signals (headend issues) • What about hotels, etc.

  47. Regulatory Activity: Post Transition Digital Carriage Issues • Once analog ends, digital must carry rules require carriage of the primary digital video signal of a local television station • Retransmission consent: cable may carry all multicast channels • What happens to analog cable subscribers? • 32 million analog subscribers (50%) • Keep their analog sets and do not use a converter box • Purchased new digital (HDTV) sets • What about signal quality?

  48. DTV Transition: NPRM Cable’s distribution of our digital signals • Access by All Subscribers • Section 614(b)(7) TV signals provided to all subscribers • Cable may not materially degrade signals • Subjective test (know it when I see it) • Objective test: must pass through all the bits

  49. Head end down-conversion analog digital Cable Head end digital

  50. In-home down-conversion Digital/analog Set top converter box digital analog digital Cable Head end digital

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