Analog television is dead in Berlin. The German capital became the world's first jurisdiction to go all-digital on the TV dial in August, when the last of its analog stations—along with viewers' analog TV receivers—went dark. Contrary to the fears of regulators elsewhere, there have been no shrieks of outrage. The lessons for American policymakers: The paralysis that grips the digital TV transition in the United States can be overcome, and taking away analog TV is not political suicide.
Before the "Berlin switch," all but 160,000 of the 1.8 million households in the Berlin-Brandenberg TV market subscribed to cable or satellite TV. As a result, the vast majority of TV viewers didn't even notice when the switch happened. The 160,000 nonsubscribers had to choose between signing up for cable or satellite TV and purchasing a set-top converter box to receive digital TV signals over the air (with prices starting at about $100). Families eligible for welfare (and not subscribing to cable or satellite) were offered vouchers to purchase discounted boxes, and about 6,000 were awarded. For a government expenditure of about $500,000, the entire Berlin market ditched analog television, cold turkey.
The benefits were immediate. Berliners had been able to bring in 12 local TV channels by antenna. Now they can watch 27 digital channels over the air, an increase that's providing some competition to cable and satellite providers. Moreover, digital transmissions deliver the 27 networks using just seven of the old analog channels. This happens through the magic of multiplexing: Digital transmissions send four separate video signals over the frequency used previously to deliver just one.
Regulators have yet to make the reclaimed bandwidth available to the market. But even the limited results now on display flash a clear message for Americans. Given a digital configuration, broadcasters could beam many times the number of analog stations currently on the dial.
And by taking a step beyond the "Berlin switch," new wireless networks could be unleashed. The United States long ago set aside some 67 TV channels nationwide, but the great majority of them are unused. In fact, just seven TV stations broadcast in the average market. Going digital could open up this mother lode of leftover spectrum in the TV band to productive use.
Suppose each of America's 210 TV markets were to trim its allocation of 67 channels down to, say, 10, and each were to broadcast a 4-to-1 multiplex as in Berlin. That would zap 40 digital channels to every rooftop antenna. Forty channel choices beats seven and would give many Americans a viable alternative to cable and satellite subscription services. The real payoff, though, is that the remaining bandwidth could be used to jump-start a host of innovative technologies that aren't related to the idiot box. New wireless Web applications could provide broadband competition to DSL and cable modems, and wireless telephone networks could be dramatically improved. All on top of your extra 33 TV channels.
Yet some people could lose their TV service. That has been the Regulatory Line of Death that American policymakers have been unwilling to breech. According to the most recent figures from the National Cable Telecommunications Association, there are nearly 107 million U.S. TV households, of which about 94 million subscribe to cable or satellite. This leaves about 13 million households which would choose to: a) begin subscribing to cable; b) begin subscribing to satellite; c) buy a digital converter box; or d) use the TV set as a DVD display monitor.
About 160,000 Berlin households have just made this choice. The government helped by offering welfare-eligible families a voucher for a digital converter—one box per family, one time. A similar plan instituted on a nationwide scale in the United States would cost about $50 million, while many billions of dollars would be generated in the auction of licenses to use the 50-plus channels liberated for advanced wireless services.
Given how easily the Berliners made their move, it is jarring that the U.S. transition to digital television is nowhere in sight. By congressional mandate, analog TV broadcasts will be turned off on Dec. 31, 2006, but only in markets where more than 85 percent of households can receive digital broadcasting over the air. Because few consumers have purchased digital tuners (for good reasons), no transition appears likely until well beyond 2006.
That's why the FCC required that, beginning in July 2004, TV sets sold in the United States must include the ability to receive digital signals over the air. By July 2007, every new TV set must include a DTV tuner. TV viewers who subscribe to cable or satellite don't need a digital tuner, but they will bear this extra cost anyway, just so regulators can hit Congress' 85 percent goal.
Sticking consumers with useless gadgetry so the government can hit a self-imposed quota ought to provoke consumer outrage. A "Dear Colleague" letter sent last spring to members of Congress by James Sensenbrenner, R-Wis., and Barney Frank, D-Mass., asks, "What will your constituents say when a $300 TV suddenly costs $550 because of an unnecessary FCC mandate?" The digital-TV-tuner mandate amounts to a hefty tax on TV sets for the vast majority of Americans. But regulators feel trapped. The 85 percent law, combined with consumers' sensible refusal to voluntarily pay for DTV tuners that they don't need, leaves regulators believing they have no other option. The FCC argues that by forcing people to buy digital receivers, they are helping to speed the analog-to-digital transition and providing for more efficient spectrum use.
A decade or more will likely be spent needlessly creeping up to the 85 percent digital-tuner deployment mark. Alternatively, a Berlin-style instant switch would force only non-subscribing households to buy new receivers. These families would be compensated by having lots more video choices on the air and an abundance of new wireless services. Having officially opened the U.S. transition to digital television way back in 1987, when it was called "advanced television," domestic policymakers might want to ponder an exit strategy seen clearly, and cheaply, on Berlin TV.