To help make the change to all-digital signals smooth, the FCC proposed that cable operators either:
- Carry the signals of all must-carry stations in analog format to all analog cable subs (also known as "dual must-carry"); or
- Carry all signals only in digital format, provided that all subscribers have the right set-top boxes.
The FCC has provided some relief to operators that already are all-digital or pledge to be by Feb. 17, 2009. For instance, the agency granted a temporary "omnibus" waiver to several service operators, including Verizon Communications Inc. (NYSE: VZ), so long as those operators agreed to go all-digital by the 2009 cutover. (See Verizon & Others Get Their Waivers and Waiver Central .)
In comments filed this week, NCTA argued that going all digital is a non-starter for most cable operators because it is very expensive.
"The second option is effectively no option at all," the NCTA said. "To exercise it would mean forcing cable customers to attach (and pay for) a set-top box to every one of the estimated 126 million analog television sets that are projected to still be in use in cable homes as of February 2009."
While a $1.5 billion subsidy program from the government will help to place converter boxes in about 15 million homes that receive programming over-the-air, the bottom line for the cable industry in this scenario would reach a cost of $6.3 billion, according to an NCTA estimate.
BroadLogic Network Technologies Inc. , it should be noted, is working on a device that would convert digital signals to analog as they enter the consumer's home, eliminating the requirement for a digital box on every cable outlet. Time Warner Investments, Comcast Interactive Capital , and Cisco Systems Inc. (Nasdaq: CSCO) are among BroadLogic's financial backers. (See BroadLogic Collects More Cable Cred.)
Both cable pressure groups also claim that the FCC's dual must-carry proposal is unconstitutional.
The ACA chipped in with a proposal of its own. It suggested the FCC "allow cable operators to convert digital broadcast signals into a format that they have the ability to cablecast to all their subscribers and to choose whether to provide dual carriage or digital must-carry signals."
The ACA, which represents 1,100 small and mid-sized cable ops serving a total of 8 million subs, estimated that 46 percent of its members already deliver digital video signals to some or all of their subs, and 75 percent plan to do so by the February 2009 transition.
"Even if the Commission had the authority to implement its DTV Must-Carry Proposal, the cost of implementation would be financially impossible for many independent cable operators," the ACA says.
Adding HD to the mix would only makes things worse. Cable MSOs that serve 1,000 subs or fewer can expect to pay in the range of $25,000 to $50,000 on upgrades required for providing HD signals, the pressure groups said. Such costs "could put many of them out of businesses," the ACA said, noting that nearly a third of members in a recent survey said they won't be offering HD signals over their cable systems by Feb. 17, 2009.
— Jeff Baumgartner, Site Editor, Cable Digital News