Digital Shift Affects Cable

[April 12, 2008]  WASHINGTON (AP) -- For months, TV viewers have been told by government, by industry and by the media that if they already subscribe to cable, there's no need to worry about the coming transition to digital broadcasting.

So cable customer Doris Spurk was surprised to learn that thanks to the transition, she would have to rent a converter box for $5.95 per month, per television set, plus pay for a $60 service call to install it. With five televisions in her home, the conversion would increase her bill by 75 percent.

"It really ticks us off," the 63-year-old central Florida resident said. "If they are in the right and can do this - charge these prices - then the educational effort that the FCC (Federal Communications Commission) is doing is really misleading everybody."

Thus far, government and the broadcast industry have focused their consumer-education efforts regarding the transition on viewers of over-the-air television programming. But information about how the transition will affect cable subscribers has been scant.

The congressionally mandated transition requires all full-power television stations to broadcast only in a digital format starting in mid-February. Anyone with a non-digital television who uses an antenna will need a converter box. The government is giving out two $40 coupons per household to subsidize the cost of the boxes, and about 10 million coupons have been requested so far.

What hasn't been widely publicized is that the transition also will affect some cable subscribers.

There are about 65 million basic cable subscribers in the United States, according to the National Cable and Telecommunications Association. About 37 million of them are digital subscribers, meaning they most likely have a set-top box. Those customers will not be affected by the broadcast transition, regardless of the age of their television.

But the 28 million customers who receive analog service - meaning they probably plug their cable wire straight into the wall and not a set-top box - may have reason to worry.

(Satellite customers, except in rare instances, aren't affected. Subscribers to Verizon's Fios TV system aren't affected unless they have secondary televisions that are not digitally equipped.)

Cable companies have two options for dealing with their analog customers when broadcasters turn off their non-digital signals.

They can either convert the digital broadcast signal to analog at the transmission source, referred to as the "head end"; or they can make their systems all-digital and supply customers with a set-top box that will convert the signal back to analog for viewing on older TVs.

The government-subsidized converter boxes, meant for use on televisions that get signals through an antenna, will be of no help in this situation.

Big cable companies like Comcast Corp., the nation's largest, are expected to take the first option and pump both digital and analog signals through their systems.

"There won't be changes in prices because the broadcast channels are going digital," said Comcast spokeswoman Sena Fitzmaurice. "But there may be changes in prices and services for other reasons."

Cable companies may move some programming from the analog tier to digital, as they have been doing increasingly; but FCC rules require that local broadcast channels remain viewable to analog customers.

Over time, a complete migration from analog to digital service is inevitable. An analog signal takes up more space on the network than a digital signal and subscribers pay less for it. With digital, cable companies also are able to offer additional services, like telephone and Internet.

Smaller cable systems are expected to have a more difficult time with the transition.

Jess King is president of Cablevision of Marion County LLC, which is about 40 miles south of Gainesville, Fla. King recently spoke to a gathering of residents of an "over-55" retirement community, including Spurk.

"My decision was, whether I continued to try to muddle along here with all of my channel space being used up with a few analog channels or whether I would go all digital," King said. "So I got an FCC variance to go all digital."

King's company is small, he says, with fewer than 10,000 subscribers, and he is facing increasingly intense competition from satellite companies that offer large packages of high-definition channels - an option not available to him due to capacity limitations.

But according to Spurk, King blamed the shift on the government.

"Immediately he starts the meeting with, 'If you don't like what I'm going to say here, blame the FCC, because they're the ones forcing the transition on us,'" she said.

The digital conversion will allow broadcasters to offer a better picture. It will also free up parts of the broadcast spectrum for commercial users and emergency responders. Last month, the FCC wrapped up an auction that drew more than $19 billion in bids for airwaves that will be freed up by the transition.

King said the primary purpose of the meeting was to educate consumers about the limitations of the government coupon program.

Whether or not cable companies like King's can pass on costs related to the transition to customers is a subject the industry and the FCC generally avoid.

The FCC's digital transition Web site says if a cable company goes all digital and requires customers to get a set-top box, "any costs related to it will be determined by the cable company."

But FCC regulations approved last fall seem to contradict that point.

The rules require cable companies to provide local broadcast channels to analog customers through February of 2012. Certain smaller cable systems can request a waiver.

They also note that a provider that goes the all-digital route must supply analog customers with the equipment needed to view the local broadcast channels, and that "any costs incurred by a cable operator in down-converting or carrying alternative format versions of signals ... shall be the responsibility of the cable operator."

If that were the case, King said it would bankrupt him.

"I can't put that much money into these homes," he said. "How can anyone - I'm talking about the government or even an individual - think that a company could absorb that kind of a cost?"

Nothing in the rules would prevent operators from continuing to offer both analog and digital signals, however.

Brian Dietz, spokesman for the National Cable and Telecommunications Association, said his organization interprets the rules to mean cable companies are prevented from recovering costs stemming from the head-end down-conversion, not the costs of set-top boxes required by the all-digital option.

But fine print aside, analog cable customers just want to know if the digital transition is going to cost them more money. And that, according to Dietz, is "a decision that's left up to individual cable operators."

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On the Net:

FCC digital transition site: http://www.dtv.gov

To order a coupon for a converter box: http://www.dtv2009.gov

[Associated Press; By JOHN DUNBAR]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.