Digital Television Coming...Slowly

Montana broadcasters pay a huge price to go digital,
but where are the viewers?

by Sanjay Talwani

When staff and guests of the Missoula television station KECI viewed the satellite feed of the 2002 Winter Olympics, they glimpsed the future of television — CD-quality digital sound, an exceptionally clear picture and a wide-screen format.

Courtesy of KECI-TV Wayne Nelson from Americom Tower Services climbs the tower on Blacktail Mountain to install the new digital transmitting antenna for KCFW -TV , Kalispell.

“This is like going from black-and-white to color,” Keith Sommer, general manager of KECI, said of the picture’s impact. “It’s history in the making.”

May 1 was supposed to be a historic date. It was the deadline for commercial broadcasters to begin broadcasting the new digital signals, revolutionizing television with new uses — increased channels, interactive features and a Web-type interface — and a great picture. Eventually, broadcasters will have to quit broadcasting the old way, via analog.

But the direction of the transition, especially in remote and small markets, is anything but clear. Consumers, so far, are treating the new technology more like Laserdiscs than DVDs. Most people who watch a lot of television get it from cable, which offers high-definition TV (HDTV) in only a few markets, or from satellite, which only offers it to those with expensive monitors. With so few viewers, stations are making no money from deploying the expensive new equipment, and consumers are hesitant to buy new equipment without much to watch.

“The simple fact is the light at the end of the tunnel may well be a train,” David Donovan, president of Maximum Service Television Inc., said of the technology.

This winter, Montana stations in Kalispell and Butte went digital, albeit with a lower-power signal than their analog channel uses. Stations in Butte and Great Falls followed suit and met the deadline. Others, including KECI, have to await FCC actions before they can begin.

The problem is that there is almost no audience. After years of government action, inaction, big promises and extended deadlines, few Americans are even aware that digital TV signals fill the air around them. For every TV sold today that can receive digital signals, more than 50 traditional analog sets are sold. Many people aren’t even aware that part of what Congress intends is not only to bring the blessings of digital TV, but also to end traditional analog TV entirely, which would render hundreds of millions of otherwise functioning televisions useless.

Spectrum wars
There is a limited amount of space available for channels in any medium, radio or television. This space or spectrum has given rise to conflict between competing stations.

Courtesy of KECI-TV Wayne Nelson from Americom Tower Services climbs the tower on Blacktail Mountain to install the new digital transmitting antenna for KCFW -TV , Kalispell.

For years, as digital companies looked to America’s crowded airwaves for space to operate, they noticed that TV stations were sitting on prime frequencies. Under pressure from Congress and competing companies to justify their free use of public airwaves, broadcasters pitched a better TV future. In the 1980s and early 1990s, they foretold of high-definition TV, a technology so revolutionary it could keep free over-the-air TV from becoming an anachronism like AM radio.

Around the same time, the government realized it had a potential revenue windfall. Since the new users would pay for their broadcast licenses at auction, they would possibly bringing billions into the public coffers. To keep their free largesse, broadcasters persuaded Congress to give them a second channel for the new digital signals. In return, Congress said, the stations would have to “vacate” their analog spectrum in 2006, ending free TV for those without a digital TV set.

This would also happen if 85 percent of the homes in a station’s market had at least one TV that could receive digital signals. Even in large markets, nowhere near 85 percent of the people will have digital television. So as the law stands now, broadcasters will keep that spectrum well beyond 2006. Meanwhile, broadcasters realized that the high-definition picture wasn’t the only thing they could do with the new technology.

A single new digital “channel” can carry HDTV and still have room to fool around with. A viewer could have a 24-hour weather channel and sports updates alongside their main program. HDTV can broadcast data with Web-type content, educational materials and public safety information. It can divide the signal into many smaller chunks for interactive services, allowing the viewer to play director of a football broadcast and pick which player to view throughout a play.

Up against the deadline
According to the National Association of Broadcasters, only about 375 commercial broadcasters made the May 1 deadline. About 800 more asked the FCC for extensions. Some station managers joke that they’ve never seen a digital set unless it was in a showroom. To make things easier for broadcasters and Congress, the FCC gave broadcasters a break last November. The commission said the broadcasters could meet the deadline with a much weaker signal than their current analog transmission. The stations will eventually have to duplicate their analog reach to keep certain rights and protections, however.

Even so, compliance with the digital transition comes at a hefty cost, about $500,000 for equipment, plus the added power costs of operating a second transmitter and antenna, with little return for the time being. KULR in Billings and KFBB in Great Falls, both owned by Dix Communications, beat the May 1 deadline by two days. But they would not have made the build-up without the FCC mandate.

“Those funds have to come from somewhere,” said Bruce Cummings, KULR general manager. “The return on investment just isn’t going to be there for some time, if ever.” For different stations, digital TV could come at the expense of equipment, or personnel or news coverage. Sommer said that his company doesn’t have to resort to drastic measures such as layoffs, but employee raises have been lowered for the stations. Although no important news events would be missed, he said, “We might not send out our satellite truck as much.”

Small-town crunch
If small-market stations like those in Missoula and Kalispell aren’t making money, it’s even tougher in places like Glendive, where tiny KXGN expects to spend hundreds of thousands of dollars to eventually build a digital plant.

Courtesy of KECI-TV Wayne Nelson from Americom Tower Services climbs the tower on Blacktail Mountain to install the new digital transmitting antenna for KCFW -TV , Kalispell.

Like many stations, KXGN is exempt from the May 1 digital deadline — not because of its small audience and low cash flow, but because its application for a digital channel assignment is still pending. Sooner or later though, KXGN will have to transmit a digital signal. The FCC has said it will grant a couple of six-month extensions if the station cannot afford to get on the air. General manager Jim Frenzel knows that KXGN and KYUS in Miles City, which have applied for extensions based on financial hardship, will have to dig deep for equipment, even if no one’s watching, he said.

“This part of the country will be the last part of the country to buy those expensive sets,” he said. “They just don’t need or want them.” As for HDTV, he said, “I’m not sure that will ever happen out here.”

The two stations are in an additional fix because they are owned by one individual, Stephen Marks. Unlike larger companies that own a mix of large and small stations and can use those resources to help the small ones, Marks may have to invest about $1 million in his three small stations — with little hope of a return any time soon.

What will happen to the smallest markets? Most observers say it’s unlikely that small stations, with their valuable spectrum licenses, will ever disappear outright. But they could become appealing to larger station groups that can afford a long-term license. To complicate matters, many rural Montanans don’t get their signal from broadcasters’ main transmitters but from “repeater” towers, for which there is no solid plan for going digital.

Just in time, federal courts and the FCC have sent strong signals that rules inhibiting media consolidation may disappear. An appeals court told the FCC to change or justify the rule that major networks may own stations reaching only 35 percent of U.S. viewers. (Networks use affiliates to reach the rest of the country.) A federal court also sent back to the FCC its rule that allows ownership of two stations in a single market by one company only if certain conditions are met. Many watchdogs predict a buying spree by larger station groups or that the networks will expand their reach.

Public TV’s strategy
Public stations are in a different position than broadcasters. They have to convince members, donors and the government that digital TV is worth the investment. Meanwhile, they face a build-out deadline of May 1, 2003, a year later than commercial broadcasters. Part of noncommercial stations’ pitch nationwide is to use the new multicasting and “datacasting” technologies for educational programming, such as the Montana Legislature in action.

As if that wasn’t a big enough draw, Montana public television stations plan to pass along PBS’ growing staple of made-for HD material and even produce their own content, starting with a documentary of Evelyn Cameron, who photographed Montana extensively in the 1890s.

A public television official said he’d like to take advantage of improving technologies that allow a broadcaster to insert local content, such as distance learning courses, as one of the channels in a multicast.

“There’s a whole slew of things we could do, from downloading software and curriculum material for outreach schools, to some kind of business,” William Marcus, general manager of KUFM, said. Around the nation, pilot “datacasting” ventures on the digital TV spectrum have included emergency response systems and high-speed Internet services. The FCC has also said public stations are allowed to make money from some of their digital spectrum.

Luckily for Montana’s stations, the 2001 Legislature kicked in $1.9 million for the digital build-out, and both stations plan to meet the deadline with less-than-full-power transmissions.

Pushing the market
It’s often asked: When will this digital transition finally take place?

“I’d say, when the Bush twins get their doctorates,” an FCC lawyer quipped at the 15th digital TV update.

Broadcasters say that the cable industry could help move things along by carrying digital signals with each main analog signal, something they are already required to do by so-called “must-carry” laws. Since most multi-channel TV households use cable, this would spur demand for digital sets. Cable companies argue that they shouldn’t have to carry the digital signal when no one’s watching, and that it violates their First Amendment rights to be told what to carry.

FCC Chairman Michael Powell made a stab at breaking the logjam in April with a plan for voluntary action by broadcasters, networks and cable and satellite systems. But the key word is “voluntary,” and some see this proposal as just a further entrenchment of a policy of government inaction.

Regardless of when it happens, it is clear that digital television will eventually happen. Electronics retailers are pushing hard to implement digital TV. Stores like Vann’s of Missoula want to keep Montana at the forefront of technology.

“Consumers want it. They’re hungry for the quality,” Rob Standley, the general purchasing manager for Vann’s said. Consumers are waiting for the content to appear, and those who move forward with the new technologies will be seen as leaders in broadcasting, he said.