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Three Lessons from the History of Digital Television for Broadband Policy Development

Recent work from the scholars who study Internet speeds find the United States has fallen behind in its broadband development. Comparisons with Asian counterparts such as Singapore and South Korea underscores the success that some countries have had in leapfrogging ahead of our nation by offering ubiquitous fiber-to-the-premises capabilities to residential customers. The horse-race nature of this narrative is reminiscent of a similar history that played out on the world stage a few decades ago. Retracing the chronology of digital television’s development can illustrate that organizing tomorrow’s policies around today’s technologies may be extremely difficult and unwise for the public interest.

The Rise of Japan and HDTV

During the 1980s, Japan emerged as an economic superpower. A centerpiece of that country’s strategy was the development of the service economy and the creation of an information society. The strength of the government-led industrial policy initiatives led Japan to forecast that by the year 2000, fully one-third of its industrial investment would be in manufacturing related to information technologies.

Among the most important national projects to support this goal was High Definition Television (HDTV). Japan created an intricate web of direct and indirect supports for HDTV development, including R&D activities; integrated circuit design; and development of camera equipment, optical recording technologies, bandwidth compression equipment and CRT, LCD and projection display units. An all-star lineup of Japanese companies worked together in close cooperation (and absent any antitrust scrutiny) to create an HDTV juggernaut.

The American HDTV Market

Acceptance by the Federal Communications Commission (FCC) of either the Japanese or European HDTV technical standards would enable American consumers to benefit from the enhanced clarity of television images that were not hampered by an antiquated 525-horizontal line system that had been approved by the FCC in the 1940s. As with today’s broadband network speed race, advocates quickly lined up to convince the FCC that the US was hurting consumer welfare, by not allowing new HDTV into the marketplace.

The US was not in any position to mount a government-led industrial planning effort, because manufacturing already had been ceded to foreign companies such as Sony and Thomson. The FCC wisely realized that because of the rapid pace of technological advancement, strict regulations might be counterproductive in the long run. It organized an Advisory Committee on Advanced Television Service (ACATS), to identify feasible policy proposals. In 1988, during a period dubbed “Hell Week,” the ACATS winnowed the potential field from 23 proposals to 6.The usual suspects were in the finalist group—Zenith, Thomson and Philips (representing Europe) and NHK (representing Japan). But two other entities formed a partnership that offered an entirely different approach to HDTV, which was based on analog technology.

A US company, General Instruments (GI), emerged as a surprise entry in the ACATS finalist field. Having popularized a digital scrambling system for HBO called VideoCiper II, GI drew upon its digital encryption experience to propose an all-digital television system, that transmitted double the number horizontal interlaced lines. This breakthrough was a real game-changer, since in comparison, an analog HDTV system like NHK’s seemed like yesterday’s thoroughbred. In a surprising development, the Massachusetts Institute of Technology joined forces with GI to propose a digital, progressive scanning system.

By 1993, with the encouragement of ACATS, five of the finalists joined together in a Grand Alliance to combine the best features of their individual systems, all organized around digital transmission and reception. NHK, representing Japan Inc., now was an analog also-ran; accordingly, it dropped out from further consideration by the FCC.

In the end, the FCC adopted a flexible standard for digital television that would leave it to the marketplace and consumers to sort out which they preferred. Major broadcasters and TV set manufacturers initially reflected these varied approaches, but as computers and television sets began to converge in design and functionality, the progressive scanning approach favored by Silicon Valley prevailed. By law, all broadcast television stations were required to convert to digital and surrender their analog channels in June 2009, which in turn opened up large chunks of spectrum for innovative mobile applications and services.

Lessons Learned from the History of HDTV

Today, as the FCC deliberates how to promote more robust broadband in the United States over the long term, it is worth remembering a few lessons from the digital television transition. First, those who support what has been known as an “all-fiber” diet for broadband may well be like NHK in retrospect—fast movers but ultimately slower in what surely is a marathon race.

Second, FCC decision-making that reflects a static rather than dynamic technological view may be quicker to complete in a rulemaking proceeding, but ultimately may be short-sided once certain premises change–such as how users actually trade off various types of fixed and mobile broadband experiences.

Third, as with digital television, there are powerful market forces at play that align with, rather than undermine, the public interest. Telecom, cable and content companies all are investing billions of dollars to enhance customer experiences and provide the widest choice of broadband options; those that choose to discriminate as a business strategy will be doing so at their own peril, reverberating in lackluster financial performance.

Although it might be useful to look to Asia and elsewhere as a competitive spur for broadband here at home, the lasting lesson that HDTV development may provide is a sense that flexible yet steady FCC leadership can represent a real competitive advantage for the United States globally as digital transformation continues apace.