NCPA - National Center for Policy Analysis

High Definition TV A Failure

September 17, 1997

As the new television season begins, most viewers are more concerned about the quality of the programming than the quality of their pictures. Indeed, for years viewers have been telling the networks that they are thoroughly dissatisfied with the quality of their fare. The percentage of Americans tuning into the three major networks has fallen by about 50 percent in the last 20 years and about a fourth in the last 10. Nevertheless, rather than deal with the fundamental problem by making their programs better, the major networks are staking their future on simply improving picture quality through high-definition television (HDTV).

HDTV is a method of producing television pictures that is far sharper and clearer than that in use today. The technology has been around since the early 1980s, but its advance has been slowed by high cost. All television cameras, broadcasting equipment and home televisions will have to be replaced to watch programs in HDTV. HDTV sets sell for between $3,000 and $5,000.

To overcome the cost problem, television broadcasters and manufacturers have pushed for government subsidies. The Reagan Administration resisted such efforts, but the Bush Administration was initially sympathetic. Bush's Commerce Secretary, Robert Mosbacher, was a strong proponent of subsidies for HDTV, warning that without subsidies for U.S. companies American consumers would be dependent on foreign technology. Mosbacher was strongly supported by the Defense Department, which viewed HDTV has an indirect means of propping up the U.S. semiconductor industry. Large numbers of semiconductors are used in HDTV.

The Japanese and the Europeans were said to be far ahead of the U.S. in the race for HDTV, largely because of government subsidies. It was widely predicted that HDTV would be the biggest technological development of the 1990s. In 1988, the American Electronics Association predicted that by the end of this decade consumers would be spending $50 billion per year on HDTV equipment, most of it going to foreigners. It warned that unless a strong domestic HDTV industry developed, it would have serious repercussions for many other industries, including personal computers and industrial equipment.

In the end, the Bush Administration decided against subsidizing HDTV. This decision was less due to concerns about the efficacy of subsidies than to technical problems. It was not yet clear precisely what form HDTV technology would take and there was a fear of betting on the wrong horse. The example of video cassette recorders was much in mind. In that case, the beta system came out first and was generally considered to be superior. But ultimately the VHS system came to dominate the market. Until it became clear what the dominant form of HDTV would be, the Bush Administration decided to hold back.

It turned out to be a wise decision. Within a short time it became clear that the analog HDTV system that the Japanese and Europeans bet on was inferior to the digital system that soon became available. Had the Bush Administration instituted a subsidy program it would have backed the analog system, even though it was already obsolete. Secretary Mosbacher's top assistant even admitted to me afterward that it was a lucky thing that the subsidy program had been killed.

HDTV has been a failure. As a recent Wall Street Journal article put it, "Rarely in the history of American business has there been a new technology that promised so much--and delivered so little." However, HDTV lives on. At the behest of television broadcasters and manufacturers, last December the Federal Communications Commission mandated that television stations start broadcasting HDTV next year. Whether anyone will buy an HDTV set to watch remains to be seen.

Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), September 17, 1997.


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