That’s The Price We Pay (For DTV)
by Rich Fiscus on August 23rd, 2008
It’s amazing that with all the money the FCC is getting from the February, 2009 DTV transition, somehow there isn’t enough to pay more than $40 of the consumer cost for a DTV converter box. This is perhaps the biggest reason why the boxes are so scarce, and contribute to what will probably end up being a huge PR nightmare for Congress and a shining example for the rest of the world to avoid following.
What’s sad is it’s mostly a matter of greed. The Federal Government is too busy counting the revenue from airwave auctions to consider whether more of it should be spent on getting consumers ready to have their analog TV signals switched off.
Let’s start with the basic economics of production and distribution. After all, the most fundamental part of getting DTV converters in the hands of the people who need them is actually making them and getting them on store shelves. If you want this done on a large scale you have to provide some sort of incentive for everyone in the supply chain to deal with them. That means profit.
So obviously it makes sense to simply figure out the cost to get a converter box to market with minimal profit per unit and issue vouchers for that amount. So of course the government has taken a completely different approach. Instead they’ve decided to come up with what bureaucrats consider a reasonable amount and leave it up to consumers to pay the difference, which amounts to anywhere from $10 - $20 per converter. This isn’t a question of price gouging. In fact its led to a shortage of boxes on store shelves, perhaps due to the lack of profitability.
As far as I know there’s exactly one manufacturer making boxes which can be purchsed for the $40 voucher value (plus applicable sales tax). Those boxes are from Echostar / Dish Network. And they’re not being sold for a profit. In fact Echostar has said they’re losing money on every sale. Instead they’re being used as a PR measure in the hope that it will foster goodwill among potential Dish Network customers.
Unfortunately most manufacturers can’t really use the boxes for that purpose. As a result consumers have to come up with as much as half the value of the vouchers out of their own pockets. That doesn’t even take into account the cost of purchasing a new antenna for people in areas with questionable reception. Meanwhile the FCC is preparing to collect enough money from auctioning off the broadcast frequencies being vacated to pay for all of this - probably multiple times.
Who’s In Charge Of Your TV?
by Rich Fiscus on August 15th, 2008
It shouldn’t be a surprise to anyone that people don’t like the cable company. Whether it’s a big player like Comcast or Time Warner or one of the numerous smaller companies, you probably don’t know a cable subscriber who thinks his provider treats him fairly. There are any number of reasons they’re so universally disliked. Although some complaints are clearly ridiculous, others are completely justified. Perhaps no complaint is more reasonable than the way the control they have over the technology behind their service.
Supposedly that was going to be changing. In the 1990s the FCC received a mandate from Congress to stimulate competition for cable STB’s (Set Top Boxes). That eventually led to the creation of CableCARD, a flawed technology that allowed consumer electronics manufacturers to create their own boxes which could work with cable signals. CableCARD technology was interesting, but ultimately flawed. Its usefulness was limited by a lack of support for interactive services like Video On Demand.
Now the cable and consumer electronics companies have embraced an add-on to CableCARD called Tru2Way. It promises to fix the interactivity issues, and allow unprecedented access to the cable system. The problem is that cable companies still have too much control.
For starters, they have so far been able to resist working with competing technology like Verizon’s FiOS on developing open standards. Incumbent cable companies are like the leaders in any market. They object to a real free market because competition makes it easier for others to compete with them.
Verizon has pointed this out in a letter to the FCC. Although they praise Tru2Way as a good idea, they quite correctly point out that a proprietary solution does more harm than good to consumers. Making consumer electronics compatible with cable systems, while leaving other services out in the cold certainly seems to provide an unfair competitive advantage.
If you’re asking what’s wrong with the cable industry protecting their business, consider the situation of people who use media center PCs instead of old-fashioned consumer electronics to watch TV. Despite the supposed openness, only Microsoft has managed to get a license to make their software work with CableCARD. if they were using an open standard like TCP/IP and Ethernet, which is what Verizon is asking for, it would show what an arbitrary, and ultimately anti-competitive decision this is.
They also would’t be able to shut out competition from Verizon, who would be able to design their service to be compatible with the same hardware built into TVs and DVRs for CableCARD and Tru2Way. Don’t get me wrong. The free market is not only good; it’s necessary. But the free market isn’t free if you let the top company control it. Without competition you don’t have capitalism.
Beckerman tells laywers to go on the offensive
by Rich Fiscus on August 13th, 2008
With RIAA lawyers reeling from one setback after another in their campaign of P2P copyright infringement cases it only makes sense that defense lawyers would want to go on the offensive right now. And in fact that’s just what noted defense attorney Ray Beckerman is suggesting on his blog.
Besides the general tip to “take MediaSentry’s deposition, and find out where the truth lies,” he also gives some examples of the way RIAA lawyers have built their cases. It shouldn’t surprise anyone who’s been paying attention in the last few months that what the Plaintiffs represent as an air-tight case is really just a house of cards waiting for a stiff breeze to knock it down.
Readhing through the briefs Mr. Beckerman links to that becomes quite clear. In one brief they call MediaSentry investigators and play up their part in putting the case together. In another they downplay the agency’s role, comparing them to private citizens at a library. Ironically these were both filed at around the same time, and in the same case.
The big problem with the argument that MediaSentry is just using publically available information is that it doesn’t actually answer the question of whether it requires licensing or not. What MediaSentry does is a commercial enterprise where they dig for information on people. Just because information can be gathered without bugging your house or tapping your phone doesn’t mean anything. What matters is your intent and that capacity in which you’re gathering information.
According to one RIAA brief a New York Attorney General actually agreed with their position. Unfortunately for them that was nearly 100 years ago and the law has changed significantly since then. Just being in the employ of an attorney doesn’t mean you can also be a private investigator without a license.
DTV converters elude consumers
by Rich Fiscus on August 12th, 2008
If you live in the US hopefully you’re already aware of the impending DTV transition next year. That’s when almost all the analog (broadcast) television signals in the country will be turned off. After February 17, 2009 you’ll need an ATSC tuner to receive over the air broadcasts. If you don’t happen to have a relatively new TV that will mean using a converter box.
Fortunately the government has given out millions of vouchers that will cover most of the cost for a converter box. Unfortunately for many of the people who are planning to use one of these vouchers they’re going to have a hard time actually finding a converter. In fact if you’re planning to go to Walmart, Target, or Kmart to buy yours plan on checking regularly and buying one quickly before they fly off the shelves.
That’s because there appears to be some supply problems that are stopping most retailers from even knowing when they’ll get more in. When they do come in they fly off the shelves within a day or two. Unfortunately that covers all the local possibilities for a lot of Americans.
The good news is there are options available if you know where to look. Your best option at this point is Best Buy. Besides being one of only two national retailers I was able to find that has them in stock most of the time, they’re also the only one I found that sells converters with S-video capability. They also have a DTV Hotline and Order Center where you can order a converter if they don’t have a store close to you. You can reach them at 1-877-229-3889.
Although they don’t sell S-video equipped boxes, Circuit City and Radio Shack are also pretty good options for buying converters. Like Best Buy, Circuit City has them in stock most of the time. Radio Shack is less consistent, but does allow you to order them in-store when they don’t have them on hand.
The real lesson here isn’t about the retailers, or even manufacturers. The bottom line is the FCC’s voucher plan was poorly thought out, and like most parts of the DTV transition hasn’t had any real oversight to find out how it’s working. The voucher value of $40 is too low to cover manufacturing, distribution, and retailer costs. As a result there’s little or no profit in them and therefore little incentive for anyone involved to make them a priority.
Despite his objections, FCC Chairman Kevin Martin has dropped the ball, and we’ve reached the point where it may not be possible to pick it up again in time to avoid a big mess next February. Then again he probably doesn’t care that much. After all he’s probably on his way out after the next President is elected.
