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Digital TV era mired in problems

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WASHINGTON — As the changeover to digital television was starting, government leaders and industry executives described the transition as one of those rare touchstone events that would, in time, change the lives of every American.

"Everything will be different," Reed E. Hundt said in 1996 when, as chairman of the Federal Communications Commission, he was about to approve the rules that set the transition in motion. "The change is so extreme that many people have not grasped it."

Now, however, many Americans still have not grasped digital television. Four years after Hundt spoke and two years after the first digital television sets went on sale, few Americans even know the change is under way. And the transition is so mired in intractable problems, squabbles and controversies that some industry executives now worry that the current plan for the digital rollout could fail.

How long will the broadcasters be willing to spend money transmitting digital signals if there are no viewers? How long will the government allow television stations to tie up two channels — one analog, the other digital — at a cost of many billions of dollars? The government is eager to auction off the analog channels and is already counting the auction proceeds — billions of dollars — in future budget projections.

Although the questions have no answers at present, a consensus is emerging that the current approach is not working.

"The transition as a whole is faltering," Ben Tucker, chairman of the National Association of Broadcasters' television board, said in a recent letter to the FCC.

Despite two years of aggressive marketing by consumer electronics companies, only about 230,000 digital television monitors have been sold in the United States, even though they now sell for as little as $2,500, compared with $6,000 two years ago. The Consumer Electronics Association argues that those numbers are impressive for a new product. But the association's figures also show that only about 40,000 of those buyers have also bought the new digital receivers that are needed to watch the new programming, and the latest figures show that sales of those receivers have actually fallen sharply in recent months. In the digital world, the television display and the receiver are usually sold separately, and the least expensive of the receivers now sells for about $600.

Those sales figures are minuscule compared with about 260 million television sets nationwide that will have to be replaced, or updated with a converter box, by 2006. Price is an obvious problem dampening sales; a comparable big-screen analog television costs $1,500 or less. But the largest reason seems to be that there's almost nothing new to watch.

The most compelling feature of digital television to many industry executives is its ability to broadcast high-definition pictures so sharp and clear that they look almost real. But even with about 150 digital television stations broadcasting in 52 cities nationwide, there is little true HDTV on the air. During nearly all of the broadcast day on most of the channels, the stations are simply showing digital copies of their regular fare, giving viewers little incentive to make the change.

The few hours of HDTV that are being shown — and at that, CBS is the leader, with offerings like sports, movies and prime-time shows — are in large part being paid for by television manufacturers or other companies that, network executives contend, have more to gain from the success of the format. The networks seem little interested in HDTV if it costs them any significant money.

"High-definition television is absolutely stalled; there's no broadcaster interest," Ed Grebow, president of Sony's broadcast and professional company, said in a recent article in the journal Electronic Media. Grebow, whose unit at Sony sells high-definition cameras and other equipment, declined requests for further comment.

At the same time, Sony's television division recently canceled its line of high-definition television sets that were scheduled to go on sale in the fall. The company now plans to delay the introduction until at least next year because of uncertainty about the transition and the many problems besetting it.

Production problems also played a role. But "there's too much political jockeying and positioning going on behind high definition," said Victor J. Pacor, head of Sony's television division. "And we're not comfortable building sets based on what we think will occur."

Konka, a Chinese company hoping to enter the American market with a new line of high-definition sets, also announced a delay last month, for the same reasons.

What's more, several hundred of the nation's television stations have made deals to lease part of their digital channel for other uses — principally to send audio-video streaming media to personal computers equipped with digital over-the-air receivers.

Network executives oppose these side deals; they fear that if part of the channel is put to other uses, there will not be enough space left for high-definition programming, which can easily fill the entire channel. They also complain that digital television was supposed to bring exciting new services to TVs — not PCs.

At the congressional hearing late last month, Rep. Billy Tauzin, R-La., chastised some station owners who were planning to lease out their spectrum, saying: "That was clearly not in the deal. If broadcasters did that, I think you'd run the risk of Congress revisiting the deal and reclaiming the spectrum. It would be a clear deal breaker not to show Americans HDTV."