Unhappy Days: How the economy will tank when plain ol' TV goes away

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/TECH/01/28/digital.tv.delay/art.digitaltv.gi.jpg caption="Will the end of analog television come in February, or sometime later? The answer is now up in the air."]

David Gewirtz | BIO
Editor-in-Chief, ZATZ Publishing

On rare occasions, the United States Congress does the right thing. This may be one of those occasions, but we'll have to wait until next week to find out.

On Monday, the Senate voted to delay the U.S. television conversion from analog to digital by four months, from a February 17th "doomsday" to a potentially less problematic June 12.

The full House voted on the bill, but it didn't pass with a two-thirds majority. That means they’ll try again next week and if the Rules Committee approves opening the bill for debate, it could pass with a simple majority.

Meanwhile, the clock's a-ticking.

Let's explore what could happen if the House doesn't go along with the Senate and pass the bill. It's not pretty.

If the House does not approve the delay, around 73 million television sets will go dark on February 17, 2009. All of the analog broadcast signals most Americans have come to know and love will cease to exist. That’s less than one month away. If you think consumer confidence was in the crapper before, wait until February 17. You ain't seen nothing yet.

Back in 2005, when the digital conversion was planned, the government recognized that there would be some people who would not be able to afford brand-new digital televisions, so they allocated $1.34 billion to provide free converter boxes to Americans. This was done by providing coupons, upon request, which could be redeemed at your local electronics stores.

But in the middle of the worst economy since the Great Depression, in the middle of what is likely to be the coldest February in years, if Grandma requested her coupon, if she was lucky enough to get one before they ran out, if she can actually find it, if she can make it out to the store, if the store has any converters left in stock so she can redeem her coupon, if she can lug the thing home and figure out how to hook it up, and if she's fortunate enough to live near enough to a digital signal tower, she might get to keep her TV. If not, she's going to be pissed.

The theory was that a fixed conversion date would hustle along a transition that's been in the works for years, free up spectrum for resale, allow TV broadcasters to maintain only one broadcast technology, help spur TV sales, and give consumers higher-quality TV with more choices.

It was a fine plan when it was cooked up back in 2005. But in an economy struggling under the weight of a nearly constant stream of bad news, the most job losses since World War II, and banks on the brink of nationalization, the timing of the DTV transition couldn't be worse.

And while June 12 is far better than stirring up a TV-watching hornets nest on February 17, I'm about to show you why it might not be a bad idea to postpone the whole transition for a few years, not just a few months.

Understanding the issue

Here's a little background. Imagine a rainbow, spread out, with all the colors. A radio/TV spectrum is like a rainbow, with different types of communication living in different parts of the rainbow. FM radio lives in one "color", analog TV lives in another, wireless phones in another, WiFi in another, cellphones in another, and so on. The FCC is the agency that allocates these areas of spectrum to different industries.

There are many buzzwords. Analog TV means plain ol' TV. Although they are different beasts, DTV and HDTV are often used interchangeably. DTV means Digital TV, and usually refers to the industry and the spectrum block. HDTV means High-Definition TV, which is a higher quality picture on a wide screen.

You can get your HDTV through your cable or satellite provider, or you can get it over the air. Why? Because digital TV also transmits over the spectrum, but the part of the spectrum it uses is much smaller and far less valuable than the part used by the old analog TV broadcasts.

By closing down analog TV, the FCC has freed up the most valuable and largest chunk of the spectrum to resell to any industry with the billions to pay for it. Television is moving to HDTV essentially because by freeing up the analog TV spectrum and then reselling it, the U.S. government expects to make a ton of bucks. This might sound like a good idea because the government sure could use the money right now. However, the actual near-term financial fallout could cost Uncle Sam far more than anything the government might make from the spectrum sale.

Confused? You're not alone.

Many of us won't be overly inconvenienced. Nearly half of American households already have an HDTV or a digital-ready television. Many other households have cable TV and don't need to worry about over-the-air broadcasts at all.

Who's going to be hurt?

There are still a lot of people who continue to rely on old-fashioned rabbit ears – or even those unsightly rooftop antennas – to watch their TVs. There are older Americans who were happy with the three networks back in 1968 and are still happy with them - and see no reason to change. There are people in rural communities where cable TV doesn't reach, and satellite service is intermittent. There are poor people who simply can't afford a new TV. And now, there are a lot of people who used to watch cable TV, but after a job loss, simply can't afford the monthly bill.

When the Digital Transition and Public Safety Act was enacted, the government recognized that there would be some people who would not be able to afford a brand-new HDTV, so they allocated $1.34 billion to provide free converter boxes to Americans without HDTVs. This was done by providing coupons, upon request, which could be redeemed at your local electronics store.

On January 8, John Podesta, Co-Chair of the Obama-Biden Presidential Transition Team asked Congress to extend the date of the mandated digital television transition. Podesta claimed the coupon program ran out of funds, over 1 million coupon requests still "sit on a wait list, unable to be fulfilled by the Department of Commerce." He further estimated that by early February, the number of unfulfilled coupon requests would soar to more than 5 million unhonored requests.

One week later, Podesta was supported in his request for an extension by West Virginia Democratic Senator Jay Rockefeller. Rockefeller submitted the bill, which unanimously passed in the Senate, that would push back the digital TV transition date to June 12. That bill is now in the House, where it's run into some resistance.

With all due respect to Mr. Podesta, he is wildly underestimating the scale of the problem. And with equal respect to Senator Rockefeller and his esteemed colleagues in the Senate, June 12 is way too early for traditional analog TV broadcasts to shut down. This deadline should be pushed out at least one year, if not more.

Wildly underestimating the scale of the problem

The National Association of Broadcasters estimates that about 15 million U.S. households rely exclusively on over-the-air signals. They estimate there are 45 million analog TVs in those households. They further estimate that there are another 28 million broadcast-only TVs in homes that do have cable or satellite, but aren't hooked up to a paid service.

However, these estimates are old, dating back two years or more. They don't account for the 2.6 million jobs lost in 2008 or the 8 million under-employed people working part-time jobs who really need full-time jobs. Many of these people can no longer afford cable TV or satellite service.

So what's going to happen on February 17 (or even June 12) if the deadline doesn't get extended a few years? First, a huge number of Americans are going to discover their TVs don't work. Like all of us who ignore public service announcements, this may well be the first time they've heard about the digital transition. They're going to call the TV stations or their geeky friends, complaining about their missing television broadcasts.

It's going to be a rough day for us geeks.

Those people who can afford to buy a TV will rush out to Best Buy, Wal-Mart, or Target. With Circuit City closing its doors, Best Buy will be the last major electronics retailer left standing. Can you imagine what it'll be like at your local Best Buy when hundreds or thousands of pissed off octogenarians crowd the store, demanding their General Hospital right now? Do you want the Geek Squad to be the only thing that stands between us and senior-citizen Armageddon? Didn't think so.

Many of us techies are going to be overwhelmed as well. The change-over was originally scheduled for a Tuesday. On a Tuesday, most of us with technical chops will either be working or job hunting. The June 12th date is somewhat better. It's a Friday and if Mom's TV goes out on a Friday, we'll all get in our cars the next day and try to make things right.

But can the techies really save the day, or are there bigger issues than which wire goes where and what the heck all those abbreviations mean?

This is also a social issue

Hardliners will say that these people had four years to get their television-watching act together. Others will say that Americans watch too much TV and overweight Americans need less television and more exercise. They'll say that even in ice-cold February, Americans should go outside, take a walk, and get away from the TV for a while. And if it's extended to June, well, everyone should be outside in June.

Many members of the technical press are now saying that if these people didn't plan right or act in a timely manner, maybe those without digital TVs or converter boxes should curl up with a good book and let the rest of America move on.

But television is a coping mechanism in stressful times, and we live in stressful times. For many people who've lost so much already, over-the-air television may be their only remaining form of entertainment, precisely because it's over-the-air and free. For others, television is the only way to stay connected with the outside world.

According to a 2003 study done by the U.S. Department of Education's National Center for Education Statistics, 27 percent of Americans over the age of 65 and 12 percent of all adult Americans have a "below basic" level of document literacy. Also, many older Americans can't see well enough to read. Watching television is how they get their news.

Television is much more central in the lives of older Americans than any other age group. According to a study by the U.S. Department of Labor, Bureau of Labor Statistics, those Americans 65 years and older spend an average of almost four hours watching TV each day (a little more on weekends).

Freaking out the middle class is not good for the economy

Like it or not, and whether it's good for us or not, television is vitally important to most Americans.

And here's where it hits the economy right where it counts. We heard a lot of lip service about the middle class in the campaign. But it really is the middle class that fuels our economy. The middle class buys products, makes goods, provides services, and performs the bulk of the heavy lifting that moves our nation forward.

When the American middle class is fat, comfy, and happy, our economy rocks. When the middle class is scared, freaked out, or broke, our economy goes into a tailspin.

On February 17, if more than 73 million TVs go dark, consumer confidence will hit an even lower low and rage will hit an even higher high.

Even if there's some improvement in the economy by June, do we really need to further upset our already shell-shocked middle class?

Who wins and who loses?

Who wins if we do the transition on February 17, or even June 12? Well, it seems like the U.S. government stands to make billions of much-needed dollars from spectrum auctions when selling off the airwaves previously used by analog TV. Local TV stations appear to win because right now, many of them are operating and maintaining two transmitters, which can be costly. Switching over reduces their costs.

Then, of course, there are the makers of television sets. Sadly, most of them are Japanese and Korean, so the digital transition will be another way to send hard-earned American dollars offshore. And, finally, if they survive the onslaught, there's Best Buy, Wal-Mart, and Target. I like Best Buy, so it'd be nice for at least one American electronics retailer to do well this quarter.

So, who does that leave as the ultimate economic winner of a Febuary 17 (or even a June 12) DTV transition? Japanese and Korean companies, of course.

Do we really want to kick America while she's down with another attack against the middle class, simply to benefit a few Japanese and Korean conglomerates?

I know the last time techies cried about a potential crisis, the Y2K thing turned out to be just fine. The tech world was planning for Y2K for some years, and they’ve been planning for the HDTV transition too. But there are differences. The big difference here is that the state of the world has changed drastically since the DTV transition planning was completed. A mistake here could be hugely problematic because we're already economically behind the 8-ball. The year 1999 was going to change to 2000 no matter what. By contrast, we can easily be prudent and hold this transition at bay.

I could be wrong. I hope I am. I hope we don't have to find out. Hopefully, our congress-critters will act together to prevent another set of major economic Crappy Days - at least in the near term.

But if the economy doesn't get measurably stronger by early June, I hope we can count on the House and Senate to push back the DTV transition yet again.

Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.