Friday, August 09, 2002

The FCC voted 3 to 1 to require that all televisions be digital by the year 2007. According to the FCC's press release, this "marks another step in the FCC's progress toward making the digital television transition a reality."

I suppose so, although why this is considered "progress" is a mystery to me. Everyone acknowledges that digital televisions will cost more, and generally speaking, consumers should have a choice (in my opinion) about whether they want to spend more money to get a higher quality product.

Imagine that the Federal Home Agency (there's no such thing now, but give it time) mandated that all homes built in America be over 2,500 square feet, on the theory that Americans would like to have more space and this would give it to them. The response would be, "Sure Americans like space, but some Americans might rather have a cheaper home with less space so they can spend their money on something else -- and that's a tradeoff they should be allowed to make."

Of course, there is a difference between the TV market and the home market -- the possibility of a collective action problem. If you are the only person in America who builds a home over 2,500 square feet, your home will still function perfectly well. But if you are the only person in America who buys a digital television, then you are basically screwed, because no one is going to supply digital programming for you alone. In order for digital programming to work at all, there have to be a substantial number of consumers with digital sets and a substantial number of programmers willing to supply the programming.

But still, who says the government has to get involved? Look at the transition that happened from records to tapes, and then from tapes to CDs. One could argue that there was a collective action problem there too -- who wants to be the first person to buy a CD player when hardly any CDs are available? And who wants to be the first record company to put out CDs when no one has CD players?

Yet here we are -- everyone has CD players and all the companies put out CDs. The transition happened, and I certainly don't recall the government mandating that every boombox come with a CD player by 1991. (The same point applies to the ongoing transition from videotapes to DVDs.)

Oddly, Michael Powell's separate statement begins by saying this:
Every year, 25 million analog sets are sold in this country, their purchasers blissfully unaware that their new sets come with a government- mandated expiration date. Someday, analog broadcasting will cease. When that time comes, consumers will expect their television sets to go on working in the digital world just as they do today. This includes the ability to receive broadcast signals. Indeed, the expectation that TV sets receive broadcast signals is so ingrained that consumers simply assume this functionality is incorporated into their television set. That is what today?s Order is all about.
Of course, if it is true as he says that digital programming is going to take over and all "consumers will expect their television sets to go on working in the digital world," then why not leave it to the marketplace? I mean, if digital programming is all there is going to be in 2007 anyway, what rational television manufacturer is going to try to sell analog models that year? They'd go out of business. I'm always baffled by the argument, often made by government agents and people on the left end of the spectrum, that "We have to interfere with the market here, because what we're mandating is what people would buy/produce anyway."


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