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HDTV Ruling May Give U.S. Chance To Re-enter Consumer Electronics

September 10, 1988

TOKYO (AP) _ New standards set by the U.S. government for a future high-quality television system may give the American electronics industry a chance to catch up with Japanese and European makers, but the result could be three separate world TV broadcast standards, officials and analysts say.

The United States has lagged behind Europe and Japan in development of high-definition television - a new wide-screen TV system with breathtakingly detailed pictures and high-quality sound that represents the biggest change in television since color broadcasting.

On Sept. 1, the U.S. Federal Communications Commission set initial standards for future HDTV broadcasts in the United States that are incompatible with those developed in Europe and Japan.

This past week in the United States, Rep. Edward J. Markey, D-Mass., asked electronics industry trade groups to submit reports to Congress by January outlining steps the government could take to ensure American involvement in high-definition TV.

″This is the last moment of opportunity for the United States to remain a major party in the world consumer electronics industry,″ said John Stern, representative in Japan of the two largest U.S. electronics trade organizations.

In Japan, broadcasts using an HDTV system developed by the NHK public television network are scheduled to begin in two years, while European companies are expected to launch sales of equipment for a separate European HDTV system in 1992, officials say. In both regions, HDTV broadcasts will be beamed direct from satellites to small receiving dishes in viewers’ homes.

The outcome of the battle among HDTV systems for the world’s living rooms, analysts say, could help determine what country will dominate the global electronics industry.

At stake are potential HDTV sales estimated by Japan’s NHK at $80 billion by 1995. But the actual cost could be much greater if companies - and countries - miss out on HDTV production, as most U.S. electronics makers have with videocassette recorders, compact disk players and other consumer products.

″The U.S. manufacturing industry is worried that HDTV will open an enormous new market to Japanese companies,″ Stern said. ″It’s not just a matter of television, but also medical and military imaging, publishing, and computer digital image-processing equipment. It’s all the same technology.″

The United States is about six years behind Japan in the commercialization of HDTV technology, Stern says, and the new preliminary FCC standards will provide it with ″an extra one year, maximum″ to catch up. Incompatibility with Japanese and European standards means manufacturers have to design separate equipment for the U.S. market.

In Europe, manufacturers were able to develop their HDTV system in about two years. But unlike those in the United States, European companies have remained strong in consumer electronics.

HDTV development began in the 1960s, when engineers at NHK started developing a state-of-the-art system they hoped would unify the world’s TV systems into a single standard.

But at international talks on adopting the NHK system as a world standard in 1986, the Europeans opposed the Japanese HDTV broadcast standard because of its incompatibility with current television equipment.

That lack of compatibility would force consumers and broadcasters to replace their current equipment - estimated to be worth about $100 billion in the United States, according to a recent Congressional Budget Office report - if they want to receive HDTV broadcasts.

According to the new FCC standards, future HDTV broadcasts in the United States must use current TV channels and be viewable on present televisions. However, to see the improved picture quality, consumers would need to buy new receivers, just as color TV sets are needed now to see broadcasts in color, while old black-and-white televisions can receive the same broadcasts in monochrome.

NHK officials say they decided to give up compatibility with current TV equipment because of the technical limitations of present systems, developed decades ago.

Since the 1986 meeting, European companies have developed a separate HDTV system that is viewable - although with unenhanced picture quality - on current European televisions, but not on those in other parts of the world.

The new FCC standards are ″a good decision,″ said Maurice Bourene, attache for science and technology at the European Community’s mission in Japan. ″It’s a chance for the United States to stimulate its own industry.″

But Bourene said the U.S. decision ″almost definitely″ means there will be three separate world HDTV broadcast standards.

″It’s better if we keep our own (European) system because it’s a small protection against the Japanese industry. Even if the Japanese develop equipment for the European market very quickly, they will need a license, and it’s not clear that they can get it. So it may be possible (for European makers) to keep hold of the European market,″ he said.

Japanese industry officials say they already have perfected technologies that will meet the FCC standards.

″The technology already exists, and Japanese companies should be able to begin production of equipment without much trouble,″ said Takeo Kumasaka of Japan’s Hi-Vision Center, an organization created in part by the Ministry of International Trade and Industry to encourage development of Japanese HDTV.

″Where were they (critics of the Japanese system) while we were spending more than $50 million to develop equipment for HDTV?″ asked a official at Japan’s Sony Corp. ″If they had suggestions, why didn’t they make them earlier?″

But while debate continues on the details of a final U.S. HDTV broadcast standard, Japan’s NHK system may become a studio and production standard, at least in some applications.

Already, film makers in North America and Japan are using the NHK system to produce movies because of its advantages over film in speed, ease of editing and adaptibility to special effects.

Soon, Japanese HDTV videocassette recorders and pre-recorded tapes are likely to be available, and cable broadcasts may follow.

″Studio standards have nothing to do with the FCC, so the FCC ruling won’t affect negotiations on a possible world production standard for HDTV,″ NHK’s Takehiko Motohashi said. ″Therefore, the FCC ruling won’t necessarily affect the exchange (between countries) of HDTV television programs.″

In other business and economic news this past week:

-The Securities and Exchange Commission, in a long-awaited move, filed extensive civil insider-trading, fraud and stock manipulation charges against the investment firm Drexel Burnham Lambert Inc., Michael Milken, the head of its junk bond trading unit, and others. All defendants denied the charges, which stemmed from an investigation tied to convicted stock speculator Ivan Boesky.

In a similar case, Stephen Sui-Kuan Wang Jr., a former Morgan Stanley & Co. rookie analyst, pleaded guilty to the first criminal charges stemming from what the government has called the second largest insider trading case in Wall Street history. And William Dillon, a fired Merrill Lynch & Co. stockbroker, pleaded guilty to fraud after admitting he traded securities based on advance knowledge of stock-touting columns in Business Week magazine.

-The Senate approved new limits on imports of textiles, clothing and shoes, defying the threat of a veto just weeks before November elections.

-The Labor Department said its Producer Price Index for finished goods rose a seasonally adjusted 0.6 percent last month, the heftiest increase since an identical rise in March.

-The government reported that the nation’s commercial banks earned $10.5 billion in the first and second quarters of this year, their most profitable six months on record.

-Automakers said car and truck sales fell 10.7 percent in August, compared with the same period a year ago when incentives prompted quicker buying decisions by consumers.

-A Commerce Department report found that U.S. businesses plan to spend a record $429.4 billion this year for plant and equipment spending.

-The Federal Reserve Board said Americans took out $2.6 billion more in consumer credit than they paid off in July, marking a sharp slowdown from the pace of growth during the first half of the year.

-A report by the International Monetary Fund predicted inflation-adjusted growth of 3.8 percent for major industrialized nations in 1988.

-The Agriculture Department said the Soviet Union bought an additional 802,400 metric tons of U.S. corn for delivery during the 1988-89 marketing year which began on Sept. 1.

-Shamrock Holdings Inc. launched a hostile bid for Polaroid Corp., upping its offer to $42 a share, or a total of $2.4 billion for the Polaroid shares it does not already own.

-A federal judge issued a restraining order temporarily blocking the $2.5 billion merger of Lucky supermarkets into American Stores, saying the combination threatens serious irreversible harm to Californians.

-Britain’s Carlton Communications PLC agreed to buy Technicolor Inc., the film duplicating company whose trademark appears on many top movies, for $780 million.

-Campeau Corp. agreed to sell all 76 of its Gold Circle and Richway stores for more than $325 million.

-Trans World Airlines Inc. shareholders overwhelmingly approved Chairman Carl C. Icahn’s proposal to buy their shares and take the nation’s seventh largest airline private.

-The latest Transportation Department figures found that about four of every five flights by major U.S. airlines arrived on time in July.

-Box-office results showed that this year’s summer movies shattered records, with roughly $1.7 billion in tickets sold, up from last year’s summer record of $1.59 billion.

End Adv Weekend Editions Sept. 10-11

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