DTV standards and transition: A comparative policy analysis

Telematics and Informatics 30 (2013) 381–392

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DTV standards and transition: A comparative policy analysis Hanlong Fu ⇑, David Atkin Department of Communication Sciences, University of Connecticut, CT, United States

a r t i c l e

i n f o

Article history: Received 16 October 2010 Received in revised form 29 August 2011 Accepted 6 October 2011 Available online 21 October 2011 Keywords: Digital TV Standards Policymaking China The US

a b s t r a c t China recently has emerged as a serious player in setting ICT standards, as evidenced by its presence in major conferences on standardization with the International Telecommunications Union. While the ATSC standard contributed to the successful completion of the DTV transition in the US, China’s home-grown DTV standard bears little, to date, on its relative success in converting one third of its cable households to digital service. In light of these differing outcomes, this paper identifies and compares the strategies behind the quest for national DTV standards by retracing the key policy initiatives in China and the US. Our analysis suggests that protectionist impulses shaping distinct standards for the US (Grand Alliance), China, and other regions dampen prospects for a global standard in DTV. However, the US has been more successful at maintaining the kind of balance between industry and governmental policy that is critical to maintaining technological innovation and a competitive marketplace. Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction Setting standards for information and communication technology (ICT) was historically the exclusive territory of developed countries. China recently has emerged as a serious player in setting ICT standards, as evidenced by its presence in major conferences on standardization with the International Telecommunications Union (ITU). From the failed Enhanced Versatile Disk (EVD) to the indigenous 3G mobile communication standard, China has attempted to set its own national standards in the hope of protecting domestic industries. This is because China has already paid a heavy price for not incubating domestic standards in digital technologies. As a case in point, patent fees amount to 40% of the production cost of a domestically produced DVD set (Burger et al., 2008). In the long run, China wishes to benefit from diffusing its standards to other countries, as is already the case with digital television (DTV). For example, there are currently several African and South American countries experimenting with or trialing the Chinese DTV standards. Setting a technical standard is a complicated endeavor entailing a synergy responsive to consumer and market demands among industry representatives, research teams, and regulatory bodies. Due to the multifaceted nature of this task, a standard-setting strategy may falter when any one of these parties is left out. Although China has been relatively successful in devising indigenous technical standards (e.g., Lu, 1999; Qian, 2002), it faces several vexing issues in coordinating technology switchovers to achieve compatibility with other countries (Starks, 2010). China’s home-grown DTV standard (Digital Terrestrial Multimedia Broadcasting-DTMB) is designed to homogenize terrestrial broadcasting standards, and poses little threat to European standard-based (Digital Video Broadcasting-DVB-C/S) satellite and cable broadcasting standards. Although the indigenous standard is potentially important for taking over the remaining 200 million households which rely solely on terrestrial broadcasting, it could be sidelined when cable TV gains

⇑ Corresponding author. Address: Department of Communication Sciences, University of Connecticut, 850 Bolton Road, U-1085 Storrs, CT 06269-1085, United States. Tel.: +1 860 486 5514. E-mail address: [email protected] (H. Fu). 0736-5853/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.tele.2011.10.001

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substantial penetration in these households. The protracted standardization efforts bear little, to date, on China’s relative success in converting one third of the cable households to digital service (Wang, 2010). In other words, the benefits of cultivating a terrestrial-only indigenous standard are yet to be seen. By contrast, the US has successfully completed DTV transition after switching off analog TV signals with a final delay on the deadline to June 12, 2009 (FCC, 2009a; Hart, 2010). While the three major international DTV standards (i.e., European, American, and Japanese) have spurred numerous scholarly inquiries, research on the Chinese DTV standard – an increasingly important regional standard is lacking in the literature. A few empirical studies have investigated some aspects of DTV transition (e.g., Feng et al., 2009; Wan et al., 2009). Few comprehensive overviews of the DTV decision-making structure and the Chinese DTV standard, to date, have appeared on English scholarly journals. This paper attempts to fill that gap by providing an historical overview of the key DTV standard-related policy initiatives and the DTV standard in China. Specifically, the present analysis contrasts Chinese DTV policymaking and standards with the more familiar American HDTV policymaking and standards to help inform our understanding of underlying technology diffusion dynamics. Second, by applying established H/DTV policymaking models (e.g., Book, 2004; Dupagne and Seel, 1998; Napoli, 2001), this paper offers a comparative analysis of the key debates and issues in H/DTV diffusion and policymaking. 2. Background 2.1. Historical overview China. China initiated its tracking research on DTV standards in the early 1990s (RFTBG, 2007). In 1992, the State Commission of Science and Technology (SCST) proposed a research project on HDTV technologies as part of the Eighth Five-Year Plan. The Academy of Broadcasting Science (ABS) under the State Administration of Radio, Film and Television (SARFT) was assigned to carry out the research project (ABS, 2008). Under the leadership of SCST, a coordination group on HDTV research and development composed of eleven ministries and commissions was established in 1994. As China embarked on the Ninth Five-Year Plan, the coordination group was replaced by the HDTV Technical Executive Expert Group (TEEG) in 1996. Headed by Zhang Wenjun from Shanghai Jiaotong University (SJTU), TEEG consisted of several universities including SJTU and leading companies with cutting-edge research on consumer electronics. After two years of extensive research on the American and European systems, TEEG submitted a sample HDTV terrestrial broadcasting system for testing in Beijing, Shanghai, and Shenzhen in 1998 (RFTBG, 2007).1 With the initial stage of preparatory research completed, the Chinese government wanted to establish an indigenous DTV standard by merging several parallel DTV systems proposed by competing research teams, including TEEG. Five systems were submitted for testing by 2002.2 In 2002, results of initial testing revealed that neither one of the systems met the demands of the desired standard on several key parameters (RFTBG, 2007). The temporary testing committee thereby recommended that further improvements on all five systems were needed before the second testing could be conducted. In September 2002, the State Intellectual Property Office (SIPO) issued a report after further evaluation on the five systems. Based on SIPO’s report, NDRC entrusted the Chinese Academy of Engineering (CAE) with evaluating the remaining two competing systems: the DMB-T system from Tsinghua University and ADTB-T from TEEG. In 2003, the second testing by CAE confirmed that the two systems could satisfy the basic requirements of DTV standards but the DMB-T system was overall superior to ADTB-T due to its innovative modulation scheme. In an effort to converge these systems, a special working group on national DTV terrestrial broadcasting standards was established by NDRC in October 2003. The special working group was dedicated to putting forward a national standard by merging the DMB-T and ADTB-T systems (RFTBG, 2007). In June of 2006, the radio and television committee under the Standardization Administration of China (SAC-TC239) conducted standard testing on the system – supplied by the special working group and the test results were satisfactory. The system, based on two somewhat incompatible standards, was a fusion of European and American systems and capable of handling single and multicarriers. SAC officially promulgated the national DTV terrestrial standard as GB20600-2006 in August of 2006; it was entitled ‘‘framing structure, channel coding and modulation for digital television terrestrial broadcasting system’’ (Burger et al., 2008; SAC, 2006). The Chinese standard, later known as DTMB, became effective August 1, 2007. The US Policymaking has been focused more on HDTV than the generic DTV standards in the US. To avoid confusion, HDTV is used to denote any HDTV or DTV related policy initiatives except when specified otherwise. Although this history has been well-chronicled elsewhere (e.g., Dupagne, 2002) and need not be retold here, a brief summary is in order. The US was a latecomer in HDTV research and development, having been initially surpassed by the Japanese (e.g., Dupagne and Seel, 1998; 1 In 1999, the National Development and Reform Commission (NDRC) – a government institution in charge of strategic planning – established a program on DTV research and industrialization, allocating additional funding to TEEG for HDTV pilot testing. China Central Television (CCTV) successfully conducted a trial with the domestic HDTV system when China celebrated its 50th national day in 1999 (Feng et al., 2009). 2 Tsinghua University proposed its Digital Multimedia Broadcasting-Terrestrial (DMB-T) system featuring Time Domain Synchronous-Orthogonal Frequency Division Multiplexing (TDS-OFDM) as the modulation scheme using multicarriers like European DVB-T and NHK’s Integrated Services Digital Broadcasting-Terrestrial (ISDB-T). TEEG submitted two systems. The first one, the Advanced Digital Television Broadcast-Terrestrial (ADTB-T) system, was a single carrier vestigial sideband system (VSB) based on the US 8-VSB standard (Burger et al., 2008). The second system utilizes Coded Orthogonal Frequency Division Multiplexing (COFDM) as the modulation scheme with multicarriers. ABS proposed a system based on Quadrature Amplitude Modulation (QAM). The fifth system was an OFDM system devised by Xidian University (RFTBG, 2007).

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Table 1 Chinese DTV Standards and Major Global Standards (source: Dupagne and Seel, 2006; SAC, 2006). System Region Mobile platform Modulation Aspect ratio Active lines Scanning Bandwidth Audio encoding Video encoding

ATSC North America ATSC-M/H 8-VSB 4:3, 16:9 480, 720, 1080 1:1p, 2:1i 6 MHz MPEG-2 AAC MPEG-2

DVB Europe DVB-H COFDM 4:3, 16:9, 2.21:1 480, 576, 720, 1080, 1152 1:1p, 2:1i 6–8 MHz MUSCIAM/Dolby AC-3 MPEG-2

ISDB-T Japan ISDB-1seg OFDM 4:3, 16:9 480, 720, 1080 1:1p, 2:1i 6–8 MHz Dolby AC-3 MPEG-2

DTMB China CMMB TDS-OFDM 4:3, 16:9 480, 720, 1080 1:1p, 2:1i 8 MHz MPEG-2 or AVS MPEG-2 or AVS

Schaefer and Atkin, 1991). Backed by several US policy groups including the Society of Motion Picture and Television Engineers (SMPTE), the American Television Systems Committee (ATSC), and the American National Standards Institute (ANSI) the Japanese system was the de facto standard for HDTV production during the 1980s in the US (Dupagne and Seel, 1998; Schaefer and Atkin, 1991). Although the US originally favored the Japanese standard, they changed their mind when the Japanese Hi-Vision system was strongly opposed by the European television equipment manufacturers on the XVITH International Radio Consultative Committee (CCIR) Plenary Assembly in 1986 (Dupagne and Seel, 1998; Hart, 2004). In 1987, Advisory Committee on Advanced Television Services (ACATS) decided that inviting prototype submissions from competing research firms and laboratories for testing was the best way to proceed (Hart, 2010). In September of 1988, the FCC issued a tentative decision that terrestrial advanced TV (ATV) would be compatible with the NTSC system during the transition phase and be operable within the existing 6 MHz television frequency bands (Dupagne and Seel, 1998; Hart, 2010). This notice of inquiry (NOI) effectively precluded the possibility of adopting the Japanese standard, as it was not NTSC-compatible and exceeded the frequency cap of 6 MHz (Dupagne, 2002). General Instrument’s bombshell announcement that they would submit a proposal based on compressing digitized broadcasting signal into the existing 6 MHz bandwidth changed both the landscape of HDTV technology and policymakers’ attitudes toward the HDTV standards (Dupagne and Seel, 1998, 2006; Hart, 2010). The announcement not only strengthened FCC chairman Reed Hundt’s determination to adopt an indigenous digital standard, but compelled rivaling research firms to develop digitized HDTV systems. On May 24 1993, the final contenders decided to form the HDTV Grand Alliance (Dupagne and Seel, 2006). The Grand Alliance system was successfully tested in 1995. ACATS made recommendation to the FCC in its final report on November 28, 1995 (Dupagne and Seel, 1998). In 1997, the FCC issued a further report spelling out the details of HDTV transition and spectrum allocation. Specifically, analog signals would be switched off on December 31, 2006, provided that 85% of the residents of any given local community can receive digital signals (Balanced Budget Act, 1997).

2.2. Standards The Chinese DTMB system is a terrestrial-only standard and China has adopted European DVB-C for its cable industry and DVB-S for its satellite broadcasting (Feng et al., 2009). ATSC is also designed for terrestrial transmission. Cable operators in the US rely on Quadrature Amplitude Modulation (QAM) to transmit digital signals over cable. The DTMB system was a combination of DVB and ATSC systems. As a result, DTMB allows for both single and multicarriers using TDS-OFDM modulation, while ATSC can only handle a single carrier based on a vestigial band modulation scheme (Burger et al., 2008). In conjunction with the terrestrial standard, SARFT started development of a standard for digital broadcasting on mobile platforms in early 2003 (Burger et al., 2008). On October 24, 2006, SARFT announced a standard (GY/T220.1-2006) termed the ‘‘China Mobile Multimedia Broadcasting-CMMB,’’ mandating that digital broadcasting on mobile devices with less than a 7 inch display be compliant with the standard (SARFT, 2010). CMMB utilizes OFDM as the modulation scheme and H.264 for video encoding. The standard enables transmission of digital signals to stationary and mobile receptors via satellite and terrestrial relays, rendering it particularly suitable for China’s vast and rugged topography (Zhu, 2009). Digital broadcasting via the CMMB network was successfully operated during the 2008 Olympics and CMMB networks had been deployed to more than 150 cities by early 2009 (Zhu, 2009). ATSC was originally designed for terrestrial DTV broadcasting. It has to be retrofitted to accommodate transmitting digital signals to mobile devices. The Open Mobile Video Coalition (OMVC)—composed of 800 local stations—started developing a DTV standard (ATSC-M/H) for mobile transmission in May 2007 (Dickson and Eggerton, 2009). The latter relies on Advanced VSB (A-VSB) for modulation and MPEG-4 Part 10 AVC (Advanced Video Coding) and SVC (Scalable Video Coding) for video encoding. ATSC-M/H was elevated to candidate standard in early 2009 and was ratified by ATSC as the official standard for mobile digital broadcasting in October 2009 (ATSC, 2009; Dickson and Eggerton, 2009). The CMMB system has been deployed for several years and has proven satisfactory for both terrestrial and satellite transmission. On the other hand, the ATSC-M/H represents a stretch from the older ATSC framework designed for stationary targets. This perhaps lends credence to the adage that setting a standard too early will rule out the latest technological advancement (Nickelson, 1990) Table 1.

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3. Theoretical frameworks The HDTV policymaking model (Dupagne and Seel, 1998) helps to identify the relevant stakeholders and interest groups, providing a basis for further analysis. The model of public interest (Book, 2004) offers dimensions along which comparisons can be made. A combination of these two models provides an optimal theoretical basis for this comparative analysis. Further, these two models are not entirely orthogonal to each other, and as such, consistency adds to the theoretical richness. For our purpose, we only extract the most compatible elements from each model to avoid a mechanistic graft.

3.1. HDTV policymaking model 3.1.1. Players The US. Building on past broadcast policy-making model (Krasnow et al., 1982), Dupagne and Seel (1998) proposed an HDTV policymaking model by splitting the regulated industries into broadcasters and television set manufacturers, as these two represent divergent interests in HDTV standardization (see Fig. 1). This model remains relevant in explicating the policymaking process behind HDTV standardization in the US In brief, this model suggests that there are four primary participants including broadcasters, manufacturers, the FCC, and Congress, and several secondary-level players including the White House, ATSC, SMPTE, the US State Department, and citizen’s groups (Dupagne and Seel, 1998). The ACATS under FCC is at the center of the policymaking model as it plays the key coordinating role between industry consortia and government agencies (Dupagne and Seel, 1998; Dupagne and Seel, 2006). Broadcasters play a strong role in HDTV standardization by participating in ACATS and by influencing the Congress through the NAB’s lobbying efforts (Dupagne and Seel, 1998; Layton, 2004). In addition to ACATS membership, manufacturers could affect HDTV standardization by both submitting technical standards for testing and later forming a coalition, known as the Great Alliance, whose proposed standard was later adopted by the FCC with only minor revisions (Dupagne and Seel, 2006; Hart, 2010). Secondary-level players can also influence the decision making with varying degrees in the process of DTV standardization. The original opposition groups included CICATS, the American Society of Cinematographers (ASC), the Directors Guild of America (DGA), and various citizens’ groups (Dupagne and Seel, 1998). CICATS argued against the interlaced video format because it was incompatible with computer’s progressive scanning (Galperin, 2002; Hart, 2010). Citizen’s groups such as the Media Access Project (MAP) were concerned about the fact that FCC and Congress were giving away the radio spectrum to broadcasters for free (Dupagne and Seel, 1998). China. Since the policymaking contexts differ so dramatically between the US and China, it’s useful to tailor analytical models for each context. Wan et al. (2009) note that transition to DTV in China is a complicated engineering, social and economic endeavor involving many stakeholders (i.e., SARFT, cable operators and household consumers). But not all stakeholders have been equally influential in the DTV policymaking process. The Propaganda Department of the CCP Central Committee (‘‘propaganda department’’ thereafter) is the de jure top administrator of China’s media industry (Feng et al., 2009). SARFT reports to the propaganda department for content control and the state council for industry policy (Feng et al., 2009; Wan et al., 2009). SARFT plays the unique central role in initiating the standardization efforts and mandating the standards for terrestrial and mobile broadcasting. In addition to SARFT, the primary players include TEEG, Tsinghua University, ABS, NDRC, and various temporary committees. TEEG and Tsinghua University’s impact are manifested by their proposals of DTV systems. NDRC and interim committees such as Temporary Committee for DTV Testing play important roles in mitigating between-industry and between-ministry disputes and pushing the standardization forward.

Manufacturer

Manufacturer Propaganda

SMPT

SAC AT SC

SCST

SIPO

Broadcaster ACATS

FCC

SARFT Tsinghua TEEG

White Opposition Groups

NDLG & Temporary Committee

ABS

Congress CAE

DTV Policymaking in the US

DTV Policymaking in China

Fig. 1. DTV Policymaking Models the US (source: Dupagne and Seel, 1998).

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There were also a handful of secondary-level players involved in the DTV policymaking process. Although the propaganda department and the state council are the top authorities, their roles in standardizing DTV are limited to arbitrating disputes and assuring that any industry policies are not deviating from the official ideology and the grand scheme of economic reform. SCST initiated DTV policymaking and made the first proposal for tracking research in the early 1990s. SAC played a similar role to SIPO in rubber-stamping the recommended standard, except that SIPO was invited to evaluate the first round of five competing DTV systems. CAE participated in DTV standardization by evaluating the TEEG and Tsinghua systems, taking a critical step toward finalizing DTMB. 3.1.2. Decision-making structures The US. Galperin (2002) notes that, while the model in which policymakers facilitate standard-setting by sponsoring and ratifying standards developed by industry consortia has been used for DTV policymaking in the US and Europe, the model has been more effective in Europe. In the US, the FCC has generally favored market-based solutions to industrial policies because any regulatory proposals would face multiple veto points and challenges (Atkin, 1993; Galperin, 2002; Napoli, 1999; Starr and Atkin, 1989). Unfortunately, market-based solutions have been either ineffective or inefficient in meeting important industry policy objectives including HDTV policy (Atkin, 1993; Napoli, 2001; Schaefer and Atkin, 1991). Napoli (2001) argues that government-mandated programming requirements are needed to promote public affairs programming in the HDTV realm because market incentives alone have proven insufficient. As Weaver and Rockman (1993) note, the American political system of checks and balances was not designed for efficient government but to inhibit ambition and tyranny. As such, Galperin (2002) contends that key controversial issues revolving around DTV policymaking have been, to a great extent, reflective of this political balance of power (for a detailed analysis on interactional dynamics, see Dupagne and Seel, 1998). China. Previous research has identified stakeholders in the DTV policymaking process (e.g., Feng et al., 2009; Starks, 2010; Wan et al., 2009). Stakeholder analysis is useful for extrapolating the impact of a given policy, but is not necessarily relevant in understanding decision-making because stakeholders are often not equivalent to decision-makers. For instance, consumers are stakeholders but are not directly involved in the DTV decision-making. Despite some similarities, the interaction dynamics among decision-making players in China and the US differ markedly. First, Chinese DTV policymaking is more hierarchical, as SARFT and NDRC play more authoritative roles than do ACATS and the FCC. As the de facto regulatory authority of the broadcasting sector, SARFT and its subsidiary ABS led preparatory research on DTV. NDRC, as a strategic planning commission, plays a similar role as ACATS by coordinating important meetings between industry consortia and governmental agencies. Different from their American counterpart, SARFT and NDRC were able to issue directives or proceed with a plan without prolonged discussion with industry consortia or subordinate governmental agencies. Although China has a more centralized policymaking structure, major and secondary players are allowed to engage in vertical and collateral bargaining (Fu and Mou, 2010; Lieberthal and Lampton, 1992). Temporary committees, organized by NDRC, serve as the interface between regulatory bodies and industry consortia and within industry consortia. Instead of imposing a DTV standard, SARFT delegated the drafting of DTV standard to industry consortia. Several domestic players such as TEEG, ABS, and Tsinghua University are invited to submit their solutions for testing. These players were able to engage in vertical and collateral bargaining when their respective solutions were evaluated by SIPO and CAE. In other words, public testing levels the playing field because SARFT cannot cherry-pick solutions from its subsidiary research units. This interaction dynamic in a way resembles the American model, one in which policymakers facilitate standard-setting by sponsoring and ratifying standards developed by industry consortia (Galperin, 2002). 3.2. Public interest model 3.2.1. Public interest The public interest model centers on the idea of public interest in media policymaking (Book, 2004). Succinctly put, by identifying the constituents of public interest and the degree to which these constituents are present in policymaking, we could come to a panoramic view of the underlying processes of a particular policymaking model. The difficulty, nevertheless, lies in how to define public interest, as it is vague and loosely-defined (Krugman and Reid, 1980). Napoli (2001) argues that the concept of public interest can be investigated from three angles: conception, operation, and application. Conceptually, public interest is determined by the majority rule, and decisions concerning public interest should be procedurally and substantively democratic. A more concrete definition of public interest entails the enumeration of various interests from the public, which exceeds the domain of this paper. Operationally, this question can be examined by the extent to which the public interest as defined above is abided by regulators. Finally, the concept’s application concerns the transformation of procedures to regulatory measures that benefit the public. 3.2.2. Triangulation of public interest Based on the public trustee model of media regulation, public interest stewardship is often regarded as a conceivable but passive outcome of democratic decision making (Book, 2004; Mou et al., 2011). However, this notion has been heavily criticized by commenters (e.g., Huntemann, 1999; Warf, 2007). Book (2004) maintains that public interest is often balanced by media industry interest and government interest, and the triangulation of which determines policy outcomes (see Fig. 2). Although public interest is placed at a pivotal position, industry and government interests form the basis upon which the

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Public Interest

Industry Interest

Government Interest

Fig. 2. Triangulation Model of Public Interest (source: Book, 2004, p. 260).

public interest often depends. In other words, the realization of public interest is often mediated through some political processes with participation from the industry. In many ways, this triangulation model of public interest is consistent with the HDTV policymaking model described earlier. The relative advantage of this model is that it offers three dimensions by which comparison can be made explicitly. Importantly, a comparable triangular dynamics have also been observed in making Internet privacy policies in China, attesting to the applicability of this model to media policy making in China (Wu et al., 2011).

4. Applying theoretical models to policymaking issues 4.1. Standards Nickelson (1990) notes that setting a standard too soon or too late can inhibit the adoption process. Important technical advances may be precluded when the standard is set too early. Conversely, a proliferation of incompatible systems may enter the marketplace when the standard is set too late. Japan pioneered high-definition television (HDTV) research and set a standard too early. By the early 1990s, its HDTV standard based on an advanced analog system lost the favor of American policymakers seeking to embrace digitized television systems developed by a domestic company (Dupagne and Seel, 1998; Dupagne, 2002; Hart, 2004). Conversely, China set its DTV standard a bit late, only after European standards had already diffused through regional cable and satellite TV industries. China’s cable operators now are facing a dilemma in which a statemandated digital conversion plan has to move forward when they have neither adequate funding to digitize their systems, nor appropriate business models to compete with telecom operators’ Internet Protocol TV (IPTV) in several lucrative markets (Zhang and Fang, 2009). China’s indigenous standard is a terrestrial-only standard (Burger et al., 2008). This could incur significant long-term costs if China decides to retrofit its European standard-based cable and satellite system with a domestic standard 1 day. So far, the terrestrial-only standard has had no direct bearing on China’s relative success in converting one third of its cable households into digital. The mandated deadline for converting terrestrial broadcasting to a domestic standard by August 1, 2007 did little, if anything, to facilitate the overall DTV transition. Although there are 200 million households still relying on terrestrial broadcasting, converting these households entails much more than setting a standard. Digitizing terrestrial broadcasting would require enormous government spending on upgrading the head-end, networks, and subsidizing STBs (Zhang and Fang, 2009), as these households are located primarily within the rural areas. No coherent policy aimed at facilitating digitizing terrestrial broadcasting has been formulated by the government, leaving the current ambitious plan of finishing the digital transition by 2015 in question (Feng et al., 2009; Starks, 2010; Wan et al., 2009). The hierarchical nature of DTV policymaking allowed China to successfully implement a ‘‘leap forward’’ strategy in digitizing cable. However, the closed DTV decision-making environment produced policies that lack vision and consideration of long term policy implications. Based on the triangular model, the public interest is not placed at the peak of the diagram in deciding DTV standards. Instead, government interest is placed at the top with public and industry interest placed at the bottom. While the government could make swift decisions by shirking public input, inadequate consumer and industry representation jeopardizes the long-term success of the DTV-related standards. From CICATS’ objection to interlaced scanning to Sinclair Broadcasting’s opposition to vestigial sideband (VSB) modulation, HDTV standardization in the US has been riddled with controversy (Galperin, 2002; Hart, 2010). Although Sinclair’s proposal of COFDM as the modulation scheme as a better alternative to VSB was reviewed and dismissed by the FCC, the dispute was not, however, resolved until 2001 when industry leaders reaffirmed their support of VSB (Hart, 2010). The FCC has been reluctant to impose a format for encoding or delivering digital signals. Broadcasters, instead, are allowed to choose SDTV multiplexing or HDTV broadcasting. The fact that there’s no mandated format for encoding over-the-air digital signal means that consumers must face a welter of confusing terms such as HDTV-capable, HDTV-ready, and HDTV-compatible (Hart, 2010). In general, issues revolving around standard setting in the US are symptomatic of the HDTV policymaking model in which the regulator is generally reluctant to intervene and prolonged negotiation is often needed to reach a decision in a relatively open policymaking environment (Atkin, 1993). From a triangular model perspective, a tri-party decision-making structure contributes to a deadlock in which principal policymakers are constrained by their bargaining dynamics. In setting HDTV

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standards, the FCC under the pressure to balance public, government, and particularly industry interests garner enough support to promulgate policies efficiently.

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was unable to

4.2. Set-top boxes (STBs) The standardization of set-top boxes (STBs) is an aspect of H/DTV standards, mirroring the decision-making dynamics of setting standards in general. However, as standardizing STBs is an important step toward standardizing DTV-related terminals, it is an issue of particular significance in H/DTV standardization. Standardizing STBs include standardizing the application program interface (API), conditional access (CAS) and EPG (Galperin, 2002). The FCC has not been able to articulate coherent policies for setting standards for DTV-related terminals. Although the two decisions of the FCC regarding DTV tuner and CableCard system (the plug-and-play standard) were seen as facilitating DTV transition (Dupagne and Seel, 2006; McConnell, 2003), they could be constrained by a variety of factors. The first decision requires all new mid-sized TV sets to include a DTV tuner after March 1, 2006 and March 1, 2007 for TV sets with less than a 25-inch screen (FCC, 2003). The decision provides impetus for DTV transition, as consumers can receive digital terrestrial signals without a converter box (Hart, 2010). The second decision mandates that a cable card be installed in all digital-cable-ready TV so that consumers can receive two-way interactive services without the need of a STB (FCC, 2003). Although the FCC held firm on both decisions, cable operators have insisted that they have the right to supply their own STBs to customers for proprietary content (Dupagne and Seel, 2006; Hart, 2010). As Galperin (2002) notes, the second decision– which is aimed at unbundling the CA and STB – could result in increased cost to consumers without resolving the issue of interoperability among STBs. Bipartisan compromise led to an underfunded STB coupon program, which in turn retarded the digitizing process (Goldstein, 2008; Hart, 2010). The premature termination of the coupon program disadvantaged those who were still relying on over-the-air broadcast, particularly low-income households. For example, there were more than 6 million households unready for the DTV switchover when the coupon program was terminated (Eggerton, 2009). Additionally, only 54.4% of the 64 million requested coupons were redeemed by the end of 2009 due to the short redemption window (NTIA, 2009). In China, the standard itself, based on Tsinghua and TEEG’s proposal, is essentially a mix of European and American systems (Burger et al., 2008). This makes it difficult to calibrate the standards for DTV-related terminals, as manufacturers struggle to produce equipment capable of handling both single and multi-carriers. In essence, the indigenous standard represents a compromise among key players rather than a progressive technical solution, characteristic of the bargaining political dynamics in China (Lieberthal and Lampton, 1992). DTV standardization also calls for synonymous actions from DTV manufacturers and other terminal-related industries. Starks (2010) notes that digital terrestrial TV sets were not up for sale until 2008, despite the fact that the terrestrial DTV standard had been released in 2006. This lag reveals the relatively closed nature of the DTV policymaking environment and the enormous difficulty that China faces in digitizing the remaining 200 million terrestrial TV households. 4.3. Business models Business models are critical for not just measuring the practical impact of industrial policies, but also for the realization of industry interest. The lack of funding and appropriate business models has partially paralyzed Chinese cable operators’ efforts to upgrade networks and roll out interactive services (Zhang and Fang, 2009). Relying on government support and bank loans, China has converted one third of its cable households into digital. It is unknown whether this expensive subsidy model can be extended to the remaining two thirds of cable households. Even if government subsidization allows cable operators to digitize the head-end and distribute STBs, they will immediately face a lack of funding to roll out interactive services (Zhang and Fang, 2009). The scarcity of quality content could further constrain consumers’ willingness to purchase interactive services (Starks, 2010). Local TV stations’ (e.g., Hunan Satellite TV) initiative in diversifying media content has prompted SARFT to issue directives limiting entertainment programming featuring TV hosts from Hong Kong and Taiwan. Motivated by SARFT’s desire to maintain CCTV’s dwindling audience base, these actions did nothing but dampen broadcasters’ enthusiasm in content innovations. In China, DTV policymaking is driven by both technological necessity and political imperatives. SARFT’s ambition to quickly modernize the broadcasting sector to compete with telecom operators is often at odds with its role as the party mouthpiece, which requires that content be provided to widest audience at minimal charges. Currently, users pay less than 2 USD per month for basic analog cable and less than 4 USD for digital cable, leaving cable operators little margin for profit (Zhou, 2010). Accounting for one quarter of American cable industry revenue in 2009 (NCTA, 2010), advertising has always been a mainstay source of revenue for cable and other MVPD operators in the US. Television digitization, however, can expand the means by which operators increase their revenues (Higgins, 2000; Kang, 2002). Increased revenues could accrue from rental charges for digital video recording (DVR), digital conversion, and other DTV-related terminals (Kang, 2002). Twoway interactive services such as VOD, pay-per-view (PPV), and electronic program guide (EPG) are very important for attracting premium subscribers (Forrester, 2009; Kang, 2002). Premium content, such as sports and entertainment packages, constitute another source of revenue for digital cable operators. Additionally, television digitization allows operators to tap

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into niche markets by offering subscription-based gender, sex and race-specific content. For example, Comcast offers subscription on demand (SOD) packages to ethnic and homosexual populations (Comcast, 2010). Due to the highly-deregulatory Telecommunications Act of 1996, cable operators are now delivering telephone, cable and Internet services to their subscribers (Atkin et al., 2006). In early 2008, 89% and 97% of all cable subscribers had access to telephone and Internet services, respectively (FCC, 2009b). Although horizontal integration has brought consumers the convenience to access different digital services from one provider, such convenience is also tainted by hyperinflationary rates (Atkin et al., 2006). The weighted average price for cable service (including basic, expanded basic and digital cable) has grown 163.1%, from $22.35 in 1995 to $58.80 in 2008, four times faster than the increase of the overall CPI (FCC, 2009b). By bundling digital telephone and Internet services with digital cable, cable operators could also sell services otherwise unnecessary to customers at seemingly lower rates. In China, political imperatives hinder digital cable operators from setting up appropriate business models. The hierarchical and closed DTV policymaking structure keeps cable operators and consumers from the negotiation table, which in turn could constrain the proliferation of DTV in the long run. In the US, regulator’s unwillingness to interfere and obsession with deregulation resulted in an unchecked market model leading to a range of well-documented problems (Atkin et al., 2006; Warf, 2007). These outcomes flow from a stalemate in a triangular balance that tends to suppress efficient decision making. In China, the ambiguous distinction between government and (broadcasting) industry interest destabilizes the power triangle because government mandates supplant negotiation on equal footing between two supposedly separate entities. In the US, the public interest is jeopardized when industry interests exert disproportional weight on government and consumer interests, tipping the subtle balance of the power triangle. 4.4. Overall strategy for DTV transition SARFT established ‘‘uniform transition’’ as a strategy to facilitate DTV transition, which means that analog signals for a residential quarter will be switched off except six or so analog channels for minimum over-the-air broadcast, when most of the residents in the area have switched to digital (Wan et al., 2009). Currently the DTV transition policy is prioritized to include cable, satellite, then terrestrial; this is known as the three-step strategy (Wan et al., 2009; Zhou, 2010). As discussed, DTV transition in cable TV has been stalled while transition to digital satellite and terrestrial broadcasting is only getting started. Unless the uniform transition can translate into effective policies or viable strategies, it will remain an empty slogan to many terrestrial-only TV households. Uniform transition, as a strategy, neither benefits the consumers nor facilitates the overall modernization of the broadcasting sector (Wan et al., 2009). In sum, uniform transition is a product of a DTV policy making process that shirks public input and reflects the hierarchical decision-making structure in which political mandates constrain the principles of free market. Compared with the uniform transition, the US government adopted a more formal and rigorous strategy in which laws and derivative programs were introduced to guide the transition. The Deficit Reduction Act (DRA) of 2005 mandates February 17, 2009 as the deadline for DTV transition (Deficit Reduction Act, 2005). The government has a strong incentive to digitize television because certain frequencies occupied by analog television channels can be freed up to serve other telecommunication purposes. By early 2008, recovered NTSC channels 52 through 69 have been auctioned off for total 20 billion dollars (Hart, 2010). To facilitate the transition, DRA established a federally-funded couple program, which offers coupons to households to buy converter boxes. Although the program has been criticized for terminating too early without enough publicity, it did help facilitate the transition because about 33 million coupons had been redeemed by the end of 2009 (Hart, 2010; NTIA, 2009). The rigidity of a uniform transition reflects a closed and hierarchical DTV decision-making structure, which has yet to produce a practical and consumer-friendly transition strategy. The uniform transition strategy is a predictable consequence stemming from an unbalanced triangular decision-making structure in which government and industry interests are placed ahead of consumer interests. Uniform transition has not been formally defined in a law, as currently there is not such a DTV transition law in China. Chinese regulators rely more on temporary negotiations, directives and regulations with limited jurisdictions. The Chinese government has supported 2.5 billion RMB for transitioning to digital terrestrial broadcasting for major cities and municipalities, and 1.3 billion RMB for transitioning to DBS for its vast rural areas (Zhou, 2010). Without a proper legal framework, it has yet to be determined whether sustainable financial support can be achieved at the local levels and funding can be audited or monitored at the central level. Although consumers in the US have been experiencing some hefty increases in access fees, the realization of these fullfledged triangular dynamics was conducive to the successful completion of the DTV transition in 2009. On the other hand, the heavily unbalanced triangular relationship, if fully developed at all, determines the heavy-handed polices leading to unsustainable business models and the tolerance of multiple conflicting standards in China. Another obvious difference between Chinese and American transition strategy involves the legalization of DTV transitioning efforts. From the Analogue Flash and Emergency Readiness (SAFER) Act of 2008 to the DTV Delay Act of 2009, the US government provided a legislative foundation for transition. By contrast, the Chinese DTV policymakers are yet to build a legal framework for DTV transition. In short, the strategies adopted by these two countries reflect respective decision-making structures. For China, a hierarchical structure nested within a closed decision-making environment resulted in the strategy of uniform transition with an unknown future impact. In the US, a more open decision-making structure built upon diverse input has produced a marketbased strategy grounded in formal laws and contributes to the successful transition.

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5. Discussion As the sun sets on the American century, broadly speaking, China has been painted as an ascendant economic power (e.g., Zakaria, 2008). Having successfully emulated disciplined, long term industrial policy models based on Japan’s MITI (e.g., Atkin, 1993), China seems eager to assume its status as a world leader. In the meantime, after getting get bogged down in Iraq in 2003, America saw its ideological poles became mired in debates about the legitimacy of any government role in policymaking. As Zakaria (2008) warns, domestic ideological attack groups, internal partisan politics, special interest power, and a sensationalistic media are weakening the federal government’s ability to adapt to new global realities (e.g., telecommunication policymaking). This dynamic was perhaps most vividly captured by the Congressional budget stalemate, in the summer of 2011, that helped trigger the first-ever reduction in America’s credit rating. Fortunately, for the US, the policymaking die had been cast a decade earlier and the country experienced a relatively smooth, if delayed, transition to DTV. Policymaking debates regarding DTV standards and transition have their roots in a set of institutional antecedents (Galperin, 2002). In the quest for national DTV standards, the US and China have exhibited similarities and unique challenges, most of which can be traced to their political and institutional determinants. Both China and the US set a hard date for completing DTV transition. While the US has successfully completed her transition, it remains to be seen whether the mandated deadline could be met in China. Much of the progress in DTV transition in both countries was most evident when the regulators were able to unite the private and public to achieve a triangular balance, leading to coherent policies. In China, government-funded subsidization programs and bank loans have contributed to converting one third of digital households (e.g., Wang, 2010). Despite a number of criticisms, federally-funded coupon programs facilitated the diffusion of STBs and the overall DTV take-up in the US (Hart, 2010). Clearly, the ongoing rivalry in such domains as the DTV could well determine economic winners and losers in the century to come. Although authoritarian media systems such as China’s are often seen as an impediment to optimal policymaking, the state is more easily able to overcome opposition from nongovernment stakeholders than can be expected in non-command economies (Wu et al., 2011). In the parlance of Feng et al.’s (2009) model which identifies cable operators and household consumers, and SARFT as key stakeholders policymaking remains dominated by the latter. This has long been a point of departure from American regulatory models (e.g., Krasnow et al., 1982; Atkin, 1993), where a coalition of stakeholders would need to reach a critical mass in order to promulgate a given policy. Although, this unbalanced triangular model led to tremendous initial success, it well could invite long-term complications as grievances from the industry and consumer could accumulate and sap the long-term objectives of DTV policies. Subject to the constraints imposed by China’s political hierarchy, SARFT plays a role that finds no immediate counterpart in the US. Unlike the FCC, SARFT has been able to successfully defend its territory from telecommunications providers by underscoring the necessity of maintaining ideological control over the broadcasting industry (Feng et al., 2009). However, SARFT’s relative independence has yet to prove beneficial to the formulation of coherent DTV-related policy. The decade-long standardization efforts culminated in an isolated terrestrial-only standard that did little to facilitate the DTV transition. In the US, the FCC generally resorts to market solutions because a deregulated and competitive marketplace is seen as the primary mechanism for generating industrial policies (Atkin, 1993; Galperin, 2002; Napoli, 1999, 2001). While the US was the first country to opt for all-digital television system, the FCC’s reluctance to intervene has retarded the global diffusion of the ATSC standard. Although the Japanese experienced a setback in the late 1990s due to the unpopular NHK advanced analog TV system (DuPagne and Seel, 1998), they have since emulated other countries by developing a true digital television standard in a short time. The US’s catch-up advantage when she leapfrogged the Japanese by producing the first true digital TV system (Schaefer and Atkin, 1991) is dissipating as the Japanese move to rapidly capture South American DTV markets (Forrester, 2009). While Chinese customers have been benefiting from low TV fares, cable and DBS rates are growing much faster than the increase of general CPI in the US (FCC, 2009b). Chinese regulator’s deliberate price caps benefit customers, but could stymie cable operators and broadcasters’ motivation to establish appropriate business models. In the long run, this could constrain the rate of DTV transition unless measures are taken to reverse the situation. On the other hand, deregulation in the US has led to increasing cross-industry consolidation and decreasing market competition resulting in hyperinflationary rates (Atkin et al., 2006). In short, neither the strong administrative interference in market operations, nor laissez-faire approaches seem to have fared particularly well in China and the US, respectively. As commentators (e.g., Zakaria, 2008) suggest, America has often become complacent after an initial success in manufacturing electronics, having experienced its greatest periods of innovation when she was still a developing country . . . not unlike China is today. Yet as Americans now debate the proper scope and size of the federal government in telecommunications policymaking, China’s, strong governmental support and decision-making ‘‘with capitalist features’’ contributes to its relative success with digitizing cable. To date, government’s strong policy has successfully converted one third of cable households into digital. It is expected that completion of the DTV transition in China will ultimately rely on concerted efforts between relevant industries and governmental agencies guided by coherent DTV-related policies. On balance, when assessing lessons to be learned from the diffusion of DTV in the US, Chinese policymakers would be wise to recognize the influences of increasing globalization and competition on the set manufacturing market. Given the protectionist impulses shaping distinct standards for Japan (MUSE), Europe (Eureka), and the US (Grand Alliance), prospects for a global standard in DTV are dead (e.g., Dupagne, 2002). In these contexts, as in China, the government’s primary concern lies

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in protecting more traditional bureaucratic and commercial interests. To be sure, Chinese policymaking in this realm carries the potential to move more expeditiously than in the US, given that policy determiners are involved and the government enjoys sweeping powers. Still, bureaucratic infighting does threaten to impede China’s ability to move forward in adjusting to rapidly changing global market dynamics. All told, China seems intent on developing an indigenous DTV standard that’s compatible with existing operations and can protect its local market from more established foreign set manufacturers. Although China may not have the benefit of any ‘‘newcomer advantage’’ in entering the potentially lucrative DTV production market, she can learn from the mistakes of its predecessors. During the middle part of the last century, Japan deftly balanced short term commercial interests with wellcoordinated, a disciplined, long term industrial policy that helped the country emerge as a leader in analog set production by 1990. However, the same long-term orientation that enables MITI to engineer Japan’s prominence in analog electronics venues worked against the country’s ability to respond quickly to changes in digital technology. By the late 1990s – after having lost dominance in several electronics industries that it had developed the US was able to contain its laissez-faire market tendencies and mount a coordinated effort to recapture that leadership (i.e., leapfrogging Japan by developing a digital standard). Had American policymakers been able to better maintain a balance between free market interplay and planned industrial policy, the US could have widened its advantage over Japan by diffusing the ATSC standard to other countries. 6. Conclusion In closing, the combination of triangulation model of public interest and the HDTV policymaking model can aptly account for issues around H/DTV standardization and policymaking in China and the US. In particular, this study found that achieving a state of equipoise – particularly between industry and governmental interests is critical to maintaining technological innovation and a competitive marketplace. More precisely, the balance between the three primary interest groups is necessary for H/DTV transition. Market-only solutions have proven insufficient and sometimes detrimental in standardizing DTV in the US (e.g., Atkin, 1993; Jones, 1981). The FCC’s reluctance to weigh in at several junctures has retarded the DTV transition (Galperin, 2002) and weakened the country’s global leadership position in technological innovation generally. Conversely, when there was a strong coordinated effort between relevant industries and the policymakers, the US was able to establish a mobile digital TV standard within only two years (Dickson and Eggerton, 2009). In a similar vein, the Obama administration’s relatively strong position in pushing the DTV timetable contributed to a successful completion of the transition to digital in the US (Hart, 2010). The HDTV policymaking model helps identify the key players and their interaction dynamics, and the triangulation model of public interest helps delineate decision-making structures in these two countries. In the process of standardizing DTV formats, key lingering policy issues in China and the US mirror their respective political structures and political decision making processes. The checks and balances within the American political system and regulatory sensitivity to the balance of power has led to protracted disputes over DTV standards among industry players, and over must-carry rules between cable operators and broadcasters. China’s terrestrial-only DTV standard, a product of compromise between government and industry interest, has yet to prove beneficial in taking over domestic markets and the overall DTV transition. SARFT’s heavy-handed ‘‘uniform transition’’ policy seems out of touch and is constrained by operators’ lack of funding and premium content. In essence, the dilemma China faces represents a fundamental paradox in which the broadcasting and cable industry’s drive for profit is at odds with their status as a governmental mouthpiece (i.e., they must retransmit propaganda content for free). Appendix A. Abbreviations ABS ACATS ADTB-T ASC ATSC ATV CAE CCIR CCP CICATS CMMB COFDM DGA DMB-T DTMB DVB

Academy of Broadcasting Science Advisory Committee on Advanced Television Services Advanced Digital Television Broadcast-Terrestrial American Society of Cinematographers American Television Systems Committee Advanced TV Chinese Academy of Engineering International Radio Consultative Committee China Communist Party Computer Industry. Coalition on Advanced Television Services China Mobile Multimedia Broadcasting Coded Orthogonal Frequency Division Multiplexing Directors Guild of America Digital Multimedia Broadcasting-Terrestrial Digital Terrestrial Multimedia Broadcasting Digital Video Broadcasting

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EVD ISDB-T ITU MAP MITI NAB NDRC NTSC QAM RFTBG SAC SARFT SCST SIPO SJTU SMPTE TDS-OFDM TEEG

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Enhanced Versatile Disk Integrated Services Digital Broadcasting-Terrestrial International Telecommunications Union Media Access Project Ministry of International Trade and Industry National Association of Broadcasters National Development and Reform Commission National Television System Committee Quadrature Amplitude Modulation Radio, Film and Television Bureau of Guangdong Standardization Administration of China State Administration of Radio, Film and Television State Commission of Science and Technology State Intellectual Property Office Shanghai Jiaotong University Society of Motion Picture and Television Engineers Time Domain Synchronous-Orthogonal Frequency Division Multiplexing Technical Executive Expert Group

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