The switch-off of U.S. analog broadcast TV signals for all high-power television stations took place this week in the town of Wilmington, North Carolina, at noon on Monday, 8 September, and many stakeholders will be watching and waiting to see how this test case might highlight any future potential problems for the rest of the country come midnight on 17 February 2009 - the official date of the digital TV transition for the U.S. Currently, each U.S. TV station has assigned capacity for two channels - one for analog TV signals and one for digital TV signals. As of the switch-over date, all analog TV spectrum (in the 700MHz spectrum) will be returned to the Federal Communications Commission (FCC) and repurposed for other uses. The FCC has already auctioned off a good portion of this spectrum - mostly for wireless broadband communications and for public safety/first responders - netting so far approximately US$19 billion in spectrum licensing fees.

Statistics from the FCC, Nielsen and others estimate that as many as 13 million to 17 million households could be analog-only over the air (OTA). The immediate net effect of the digital TV (DTV) transition is that television viewers with analog TV sets not connected to cable, satellite or telco-based pay-TV service will need to take action before 17 February 2009 to ensure their TV sets continue to work.

This means getting a digital TV that has a digital tuner, getting connected to a pay-TV service, or connecting the analog TV to an OTA converter. The U.S. Congress-sponsored "TV Converter Box Coupon Program" allows U.S. households to obtain up to two coupons, each worth $40. These coupons can be applied toward the cost of eligible converter boxes. As of August 2008, about 150 converter boxes had been approved for the program, which is administered by the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA - see http://www.ntia.doc.gov).

Wilmington is the 135th largest television market in the U.S., with about 180,000 television households, according to Nielsen. It is located on the seacoast in the southern part of the state, and it is estimated that less than 10% of its viewers rely on OTA broadcasts to get their television programs. FCC officials reported receiving several hundred calls from local residents, many of whom did not know that the switch had taken place, while others reported trouble hooking up converters. Local news reported brisk sales of converter boxes and digital antennas at consumer electronics and big-box retailers. A bevy of officials from local, state and national organizations and media from all over the world were also on hand to witness and support the event, including:

• The FCC, the chief telecom regulator, which set up a call center
• The NTIA, an agency of the U.S. Department of Commerce that oversees the government program responsible for issuing coupons to buy digital-to-analog converters for OTA TVs
• The National Association of Broadcasters (NAB), a broadcast industry trade association that has been funding and conducting consumer workshops throughout the area to heighten the awareness of the early transition
• The Consumer Electronics Association (CEA), which represents the CE manufacturers and which sent hundreds of converter boxes to nursing homes throughout Wilmington

The switch to digital broadcasting is a phenomenon occurring worldwide; however, each country is approaching it differently. Japan is switching to all-digital in 2011, while many European countries are either already there or in the midst of planning their transition. In the U.K., for example, the transition is taking place over three years and on a regional basis, whereas in the U.S., the DTV transition happens en masse nationwide on 17 February 2009 - in part due to the way the initiative is being funded.
The NTIA is administering the government-sponsored program for digital-to-analog (DTA) converter boxes. It has allocated almost US$2 billion of the auction fees to fund the public awareness and converter program for households that get their programming OTA. Those consumers with digital TV, those with TVs connected to cable and those with digital satellite pay-TV service won't need the OTA converters.

It is expected that there will be at least some technical or operational issues associated with the DTV transition, however. Not the least of these is consumer confusion, despite massive public service campaigns by broadcasters, cable and satellite TV providers on TV, radio and other media. There is the potential for problems related to changes in digital signal strength and contour vs. analog, as well as the ability of older indoor and outdoor antennas that won't handle digital signal, even with a digital converter - among other issues. In addition, due to the way the program for converters has been set up by the NTIA, nursing home residents will not be able to apply for government-sponsored coupons for DTA converters. While the policy is under review, it could mean that nursing home residents, depending on how they obtain their TV service, could have trouble receiving the digital broadcast signals on their TV sets.

While Wilmington is the first market to go digital, some markets have FCC permission to make the transition earlier than the February deadline (as early as November), especially those in northern climates where icy roads, snow and freezing temperatures might make the technical transition too difficult in the winter, especially the repositioning of TV transmitter equipment for digital transmissions.

Wilmington, however, is the only market that volunteered for the early test transition, so it will be interesting to see what the potential technical issues and challenges will be. It was selected in part due to its location, with terrain that is relatively flat and free of aerial obstructions that could compromise signals. Some are criticizing the timing, however -right in the middle of hurricane season - as this could compromise some residents' ability to get emergency alerts, evacuation orders and news bulletins. The statewide public broadcasting station that will continue to broadcast the analog signals which should get local residents through until after hurricane season ends, which is usually the first week of November. As there are very often power outages due to hurricanes, the converter boxes approved for this market have battery backup built in.

Digital TV transition is expected to be a boon for consumer electronics manufacturers of flat-panel LCD or plasma TV sets, in addition to spurring increased uptake of pay-TV subscriptions for the cable, satellite and telco TV offerings. There were about 112 million TV households in the U.S. in 2007, with about three TVs per household on average. While shipments of DTVs are strong according to the CEA (more than 32 million are expected to sell this year alone) there are still many legacy analog TV sets relegated to spare rooms, not connected to a digital set-top box and only using either indoor or outdoor aerial antenna. So the opportunity is quite substantial for a number of stakeholders.

There are a host of issues related to the DTV transition. Look for an upcoming report that outlines in more detail the implications of this technical milestone for cable operators in particular.

Recommended reading: Digital TV technology profile in "Network Service Provider Infrastructure Hype Cycle 2008."