industrial policy morass In 1996, Congress established a timetable for the conversion to Digital Television:

The congressional plan "loaned" each existing broadcast station in America a second 6 MHz parcel of spectrum to begin the transition to DTV. Broadcasters would continue to transmit analog signals on their old 6 MHz analog slice of spectrum until 2006, or until 85% of Americans had made the DTV transition, and then return it to the FCC for auction.

In fact, Congressional budget projections rely on revenues from the auction of the returned spectrum:

"Congress has permitted spectrum auctions, intended as an efficient and objective means to licensing spectrum, to become a mere tool for raising revenue," said Sen. Sam Brownback (R-Kansas) during a communications subcommittee meeting in June. The digital television transition, he said, was made because of budgetary needs, not technological needs.

In other words, Congress created an industrial policy that was good for Congress, not for consumers. But it gets better:

However, a funny thing happened on the way to the bank: Digital television went to hell. With legislators locked into a finite switch-over date, industries gained bargaining power.

Why did DTV go to hell?

New DTV transmissions require that consumers purchase a digital ready TV set or a set-top box to pick up digital feeds. So if you want to receive those gorgeous new digital pictures, you'll need to plop down some serious cash. New DTV sets still cost a couple of thousand dollars, and set-top converters can cost hundreds. Consequently, not everyone is rushing out to purchase new digital ready sets or converter boxes. This means the conversion from analog to digital TV is going to take several years, perhaps even decades, to complete. Because of this, television programmers are not providing much of their fare in high-definition digital formats. They argue that set makers aren't bringing down costs fast enough or providing enough built-in digital converters to make it simple for consumers to make the transition. At the same time, the manufacturers blame the programmers for lack of content. And both parties blame the cable industry for not allowing digital programming to pass through their systems. This amounts to a vicious circle of finger pointing, with each side accusing the other of not doing its part to make the transition a success.

And where is the bargaining power going? Congress wants the FCC to mandate on Thursday that all new TV sets include digital tuners by 2006. This, they reason, will incent broadcasters to provide DTV programs. Consumer electronics makers balk -- digital tuners cost $250 apiece and only benefit the 15% of consumers (like me) without cable or satellite. Instead they want the FCC to require cable operators to carry all local digital signals on their systems. Meanwhile, the content providers want the FCC to mandate a broadcast flag that will prevent recording and duplication of digital programs. But Cato makes the case that the whole ill-thought-out policy resulted from the myth that TV stations "serve the public interest" and deserved a free giveaway of spectrum. And so I'll give them the last word:

Even the most well-intentioned industrial policy is doomed to fail if the will of consumers is ignored. Congress should have auctioned off this spectrum back in the mid-90s and let the chips fall where they may. DTV would probably have emerged, but through other means (satellite or cable), and other wireless providers would have snatched up the spectrum at auction and put it to better use. As it stands now, we're left with the mother of all industrial policies, and very few pretty TV pictures to show for it.