Final DTV transition is relief for some businesses
NEW YORK (AP) – It's not just TV viewers who will be relieved when analog broadcast signals are shut down Friday, sparing them from incessant reminders about converter boxes. Some businesses are eagerly awaiting the end of a process that began in 1987, when the shift to digital broadcasts was proposed.
"We're really excited that this is finally behind us," said Bill Stone, president of Qualcomm Inc.'s Flo TV service.
Flo TV, which broadcasts digital TV to specially equipped cell phones, spent $558 million two years ago for the rights to use UHF Channel 55 around the country. Qualcomm counted on being able to use that frequency right after Feb. 17, when U.S. full-power TV stations were originally slated to end their analog broadcasts.
The delay of the analog shutdown to Friday forced Qualcomm to postpone the launch of Flo TV service in new markets, costing the company tens of millions of dollars, Stone said.
Qualcomm will activate Flo TV service in 15 markets this weekend, including Boston, Houston, Miami and San Francisco. More markets will launch later this year, bringing Flo closer to its goal of nationwide coverage.
Cellular carriers Verizon Wireless and AT&T Inc. paid a combined $16 billion for spectrum to be vacated by TV broadcasters, but the delay has had little effect on them, since the wireless broadband equipment they plan to deploy is still in development. Verizon Wireless plans to turn it on next year.
The analog shutdown also helps TV broadcasters, which have suffered greatly because of declining advertising rates in the economic downturn. Several are in bankruptcy protection. After Friday, broadcasters will be freed from having to maintain expensive analog antennas. The vast majority of them are already broadcasting digitally, so there is no new cost coming for replacement broadcasts.
Best Buy Co.'s CEO, Brad Anderson, said last year he was "very nervous" about being able to get and distribute adequate stocks of digital TV converter boxes ahead of the shutdown.
"I think it's one of the biggest risks our industry has," he said.
But manufacturers and electronics retailers have met the challenge of supplying converter boxes, which generally cost $40 to $60. And sales of digital TVs – which don't need the converters – have been strong, even as other consumer spending has declined.
Other businesses have also gotten a one-time bonanza out of the transition.
A St. Louis-based manufacturer of TV antennas, Antennas Direct, said sales for the first quarter of the year more than tripled from the same period last year, to $2 million.
The cable industry has tried to sign up new customers who would rather not deal with the challenge of getting set up to receive digital TV broadcasts.
Joel Kelsey, policy analyst at Consumers Union, testified before the Federal Communications Commission last week that cable TV operators have run ads that say viewers have to act to not lose TV service, without mentioning that consumers can buy a converter box for which a $40 government coupon is available.
The ads "take advantage of the confusion around the digital transition," Kelsey told The Associated Press. Moreover, when consumers have called cable companies to sign up for a low-cost plan that was advertised, they have been pressured to buy more expensive services, Kelsey said.
While some customers might not have had a good experience when they called to sign up for service, National Cable & Telecommunications Association spokesman Brian Dietz said cable has "gone beyond the call of duty" to educate consumers. The association said cable companies have spent $250 million on ad campaigns that promoted only the digital TV converter boxes and coupons.
Cable companies have said the transition netted them some new customers in the first quarter, but it wasn't a mass migration. Time Warner Cable Inc. told investors Thursday that it had a spike of new customers in February, around the time of the original deadline, and call center activity has picked up this week, as well, as the last procrastinators start dealing with the transition.
The beneficiary of the greatest windfall from the transition is undoubtedly the U.S. government. It has pocketed $19.6 billion from the auction of freed-up airwaves.
– AP Business Writer Deborah Yao in Philadelphia contributed to this report.