Investor's Business Daily
Digital Television Will Spark Market Boom INEN
Date: 11/14/97
For the first time, the market will shape the future of television
technology. New and open standards for high-definition television now
allow companies to adopt advanced technologies quickly and give
consumers an entirely new and interactive information window to the
world.
As the Clinton administration seeks to limit encryption software, expand
universal-access guarantees and pursue other types of federal industrial
policy, it would do well to learn from the revolutionary change already
occurring in the television industry.
A year ago, the ''Grand Alliance'' of consumer electronics makers and
broadcasters seemed likely to prevail as arbiters of new federal
mandates for HDTV. The Grand Alliance lobbied for Federal Communications
Commission standards covering every facet of digital broadcasting.
Without such rules, alliance members argued, the TV industry would lack
the certainty it needed to pursue advanced technology.
Of course, the only real certainty would have been a static technology
wedded to a guaranteed market -locking out new competitors and forcing
consumers to pay for a system they had no hand in choosing.
But a new and effective coalition of computer makers, cable companies,
Hollywood producers and directors, and a few conservative think tanks
worked with the FCC and a small minority in Congress to halt the Grand
Alliance's juggernaut. The alliance was forced to the negotiating table.
This led to several weeks of exhausting talks and heightened public
scrutiny. In the end, the Grand Alliance agreed to remove from any FCC
standard the vast majority of specifications that would advance more
quickly in a market setting. Specs remain, unfortunately, for audio
formats and compression algorithms - two steadily advancing
technologies.
Overall, the market and the consumer gained the leading role in crafting
standards for digital TV. They could also more easily develop entirely
new forms of television - and fundamentally redefine the medium.
Top- down technology mandates don't work. They're spawned from political
compromises among myopic special interests. But such rules constrain the
adaptability and growth of new technology to what is feasible today
rather than tomorrow. And they impose costs on both consumers and vital
industries. The lost economic opportunities are clear.
With more freedom, the opportunities are plentiful. Less than six months
after the FCC agreed to a vastly reduced mandate on HDTV, Microsoft
Corp. purchased 11.5% of Comcast Corp., the nation's fourth-largest
cable operator, for the tidy sum of $1 billion.
More recently, Microsoft said it may invest an equal amount in
Tele-Communications Inc. , the nation's largest cable company.
It's no accident that Microsoft's investments - including a $500 million
bid for WebTV - so closely follow the FCC's rule allowing market forces
to replace the 50-year-old, federally mandated TV system.
As Microsoft and other high-tech firms expand their business focus to
TV, they will change not just the faces of media, but their very nature.
Free to experiment in the market with ''computer friendly'' television
standards, these firms finally will give consumers the economic freedom
to choose among an ever-greater array of television- media options. And
the battle lines marking last year's rivals in the TV standards debate
will fade as relevant industries discover fresh reasons to compete and
ally.
Jamie Linen is a former staff member of the U.S. Senate Subcommittee on
Communications and served on the task force that developed the
Telecommunications Act of 1996.
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(C) Copyright 1997 Investors Business Daily, Inc.
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