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As House reconsiders digital TV delay, telecoms weigh their stakes

While consumer groups have pushed for a delay of the digital TV changeover, carriers will see their own expensive properties being pushed back months from utilization, which could delay everything from infrastructure rollout to precious investment cash.

Congress's back-and-forth on delaying the analog-to-digital TV changeover has telecoms large and small sweating -- though the end result probably won't be game changing for many players.

The Senate has again passed a bill that would push the Feb. 17 transition deadline back four months, putting the fate of the changeover into the hands of the House, which previously voted the bill down. This time may be different, however.

"It looks [as if] the House will pass the delay the second time through," said Tom Nolle, president of CIMI Corp. What's changed? Largely, procedural issues. Last time the bill saw the House floor, it required a two-thirds majority vote for passage because of suspension of House rules.

When the bill hits the House floor this time, probably on Wednesday, it will require only a simple majority for passage. Sponsors said it only gives broadcasters the option of delaying their switchover.

Political leaders are pushing for the delay because an estimated 2 million to 6.5 million households still do not have televisions equipped to handle the new digital signals, and a special fund created to defray the cost of digital-analog converter boxes has run dry.

But critics charge that any delay will only further confuse consumers. Already, some analysts are calling the transition "one of the worst understood consumer education programs in modern times." "Our members have undertaken great expense and have endeavored to educate their consumers about the February 17 transition date, and a delay is frustrating to them," said Caitlin Colligan, public affairs manager for the National Telecommunications Cooperative Association (NTCA), which represents more than 580 small and rural telephone cooperatives and companies.

Colligan said the NTCA had met with House Energy and Commerce Committee Chairman Henry Waxman's staff to share its concerns that member companies which have purchased a portion of the 700 MHz spectrum would be unable to utilize it as long as broadcasters continue to transmit analog television signals.

In addition, a number of larger players have invested heavily in the newly freed spectrum. Any delay would push back their plans, which range from Verizon's high-speed LTE network to MediaFLO's expansion of its live mobile video service. In all, about two dozen companies have purchased national or regional licenses that could jump start new high-speed coverage or even new companies.

At first, Verizon Communications, a partial owner of Verizon Wireless, urged Congress to "resist" a delay, while MediaFLO wrote in a letter that any delay is "unfair, unjust and inappropriate."

Verizon later changed its tune, agreeing to a short delay, a position AT&T had already embraced, saying the move would provide a smooth transition -- even as it delays some of AT&T's competitors' plans.

Why the turnaround for Verizon? Because LTE is highly unlikely to be deployed within four months, and an agreement to a short delay may avoid some nasty political and public relations fallout.

"The people who bid on and won the auctions are anxious to start exploiting what they purchased," Nolle said. "But truth be told, if there were a four-month delay in the spectrum, the effect is more psychological and financial than it is tangible."

The deeper implications of a delay may be for smaller regional or niche media carriers that purchased a portion of the spectrum -- and those that will compete against them.

"If you bought rights to get any of the spectrum that is being vacated, the delay isn't a good thing," said Stephen Blum, president of telecommunications consultancy Tellus Venture Associates. "If you don't own any of that spectrum, [and] your competitors are being delayed, in the short term that's a good thing."

Once the 700 MHz spectrum is finally opened up, it's likely to create a number of options and competitors, particularly in rural, often underserved markets, for which Nolle said the spectrum is ideal and which also happened to be targeted by President Barack Obama as a priority for improved broadband access.

In addition to a four-month delay in new wireless rollouts, any congressional action to push back the impending switchover would create investor uncertainty for many of these new initiatives, Blum said.

"The handover was originally supposed to happen years ago," he said, adding that a delay now creates the potential for further delays later. "Anything that slows down the industry is less than optimal."

Have your own thoughts on the digital TV rollout? E-mail article author Michael Morisy, or read our continuing coverage at the Telecom Timeout blog.

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