CEA Commends FCC for Accelerating 100 Percent DTV Tuner Requirement; Expresses Concerns over Marketplace and Consumer Impact of Proposed New 2006 Tuner Deadline.

ARLINGTON, Va. -- Today's action by the Federal Communications Commission (FCC) to expedite the 100 percent deadline for digital television (DTV) tuners in television screen sizes 25- to 36- inches will help speed the consumer migration to DTV and reduce marketplace problems with the 50 percent requirement for sets in that range, said the Consumer Electronics Association (CEA). The FCC action moves the 100 percent deadline from the initial date of July 1, 2006 to March 1, 2006 but maintains the timetable calling for 50 percent of sets with an analog tuner sized 25- to 36- inches to incorporate a digital tuner by July 1, 2005. The order came as the FCC reviewed a petition submitted by CEA requesting the expedited date for the 100 percent requirement and an elimination of the 50 percent requirement.

"We are pleased the FCC has accepted our proposal to expedite the 100 percent tuner deadline. Our proposal provides the certainty manufacturers need to plan and produce products to help complete the DTV transition," said CEA President and CEO Gary Shapiro. "CEA will continue to work closely with the FCC as further actions are taken to help complete the transition to DTV."

At the same time, CEA expressed disappointment over the decision to maintain the 50 percent deadline. As noted in the FCC Report and Order, and also by FCC Commissioners Adelstein and Abernathy, the realities of the marketplace make the 50 percent requirement date problematic, said CEA. While conceived as a phase-in for the benefit of manufacturers and retailers, in reality the 50 percent requirement creates uncertainty in the marketplace for each group and slows the ramping up of volume production necessary to bring costs down. Indeed, Commissioner Adelstein in comments today noted that "(t)oday's decision is unavoidable even if it is at odds with the free market system." CEA agrees that manufacturers and retailers cannot force consumers to purchase televisions with digital tuners, especially considering that only 12 percent of consumers receive their television signals over-the-air.

CEA also expressed concerns over the Further Notice of Proposed Rulemaking (FNPRM) issued today by the FCC recommending that DTV tuner inclusion in TV sets of all sizes be complete by no later than December 31, 2006. CEA cautioned that this proposed new 2006 tuner mandate would sharply raise prices on smaller sets, harming low-income consumers. CEA is very concerned that accelerating this schedule from its original July 1, 2007, date will be extremely difficult for manufacturers to meet and would cause severe disruption in the consumer marketplace. If implemented, such a requirement would likely cause a jump in prices, thereby reducing the retail market for these sets. Manufacturers relied on the original FCC mandate in their product planning, and need a minimum of 18 to 24 months to plan, develop and deploy new equipment. An accelerated tuner mandate could force some manufacturers who determine that it is not feasible to meet the new regulations (and fear inability to comply with the FCC's regulations) to move to tuner-less sets or to stop manufacturing altogether the TV models which cannot be fitted with digital tuners--which many manufacturers are reluctant to do. This also would defeat the purpose of the tuner mandate itself.

Even if manufacturers were able to meet such a severely foreshortened production schedule, an earlier timeframe could result in cost increases that the marketplace cannot sustain. For smaller sets, 13- to 26- inches, the requirement would double the development costs for manufacturers, as well as double the price of a typical 13-inch television to consumers. If the product is rejected by lower income and other consumers because the price exceeds their budget, it will not be carried by retailers and, eventually, not produced by manufacturers.

"The unfortunate result of accelerating the tuner mandate deadlines for all sets would be to decrease the number of DTV tuners in the marketplace, which clearly does not serve the transition," said Shapiro. "By contrast, the current and anticipated July 2007 date allows time for economies of scale to fully develop. This will lessen the sticker shock for consumers, allowing these products a chance to compete against less expensive, tuner-less alternatives."

In response to comments from Commissioners Adelstein and Copps regarding consumer education, Shapiro noted that "CEA will continue its tireless efforts to educate consumers about the DTV transition. We are proud recipients of the 'Achievement in Consumer Education (ACE) award from the National Association of Consumer Agency Administrators for our work with the FCC to educate consumers about digital television." The ACE award specifically honors "Digital Television: Tomorrow's TV Today," created and sponsored by the FCC and CEA.

About CEA:

The Consumer Electronics Association (CEA) is the preeminent trade association promoting growth in the consumer technology industry through technology policy, events, research, promotion and the fostering of business and strategic relationships. CEA represents more than 2,000 corporate members involved in the design, development, manufacturing, distribution and integration of audio, video, mobile electronics, wireless and landline communications, information technology, home networking, multimedia and accessory products, as well as related services that are sold through consumer channels. Combined, CEA's members account for more than $121 billion in annual sales. CEA's resources are available online at www.CE.org, the definitive source for information about the consumer electronics industry.

CEA also sponsors and manages the International CES - Defining Tomorrow's Technology. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.

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