NCPA - National Center for Policy Analysis

What Price Digital TV?

April 21, 1997

In mandating a switch from analog signals to digital television, the federal government has handed American consumers a colossal bill which will come due over the following decade. Sometime in 2006, the analog spectrum will be returned to the government, and the U.S. will go digital -- whether viewers want it or not.

  • The switch will make obsolete more than 250 million TV sets in the next ten years -- at a minimum cost of $25 billion just to convert them.
  • The initial price tag for a digital set is expected to range between $3,000 and $5,000.
  • Those wishing to utilize set-top converters will have to shell out $100 to $200 -- without any improvement in picture quality.
  • A consumer poll conducted by the Harris Corporation established that only 18 percent said they would be willing to pay up to $1,000 extra for the new sets.

The broadcast industry had argued that it had to have the rights to the new spectrum free in order to introduce digital TV. According to some estimates, the spectrum giveaway cost the federal government as much as $70 billion in lost revenues.

Analysts wonder what will happen if consumers balk at paying the price for new digital sets. If so, broadcasters may have to keep the old analog system -- rather than returning it to the federal government as the agreement now stands.

Source: Daniel J. Murphy, "Digital TV: A Field of Dreams?" Investor's Business Daily, April 21, 1997.


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