Millions Left Behind as TV Goes Digital

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Among these groups, Nielsen says, the elderly population is the most ready, while younger viewers, African Americans, and Hispanics are disproportionately unprepared.

Unnecessary Cable Packages for Seniors

The U.S. government has dedicated more than $2 billion to the transition, including subsidized coupons so that people can buy converter boxes to get digital signals. But just getting a converter box doesn't always address the issue. Craig Moffett, senior analyst at Sanford C. Bernstein, says digital antennas may not be as effective at picking up television signals as analog gear. "I think there's this widespread perception that if you've gotten your coupon and you've redeemed it for a converter box, everything is going to be hunky-dory," Moffett says. "But the converter box is only half of it—you also have to be able to receive the digital signal." Some 80% of the 14 million households that receive transmission "over the air" rely on rabbit ears instead of rooftop antennas, he says, which "probably will not cut the mustard." Those living in multi-unit buildings in highly congested areas are the most likely to face reception issues, he predicts.

Elderly-care workers in the Bronx say many fixed-income seniors subscribed to large cable packages, mistakenly thinking that subscriptions were necessary to keep their TV. "We started giving workshops on this [digital transition] over a year ago," said Carmen Matos, a director of the HOGAR senior-care assistance program. "A lot of them still think that they need to get expensive premium packages, which they really can't afford."

Media research and analysis firm SNL Kagan reported 826,000 new cable and direct-broadcast satellite customers in the first quarter of 2009—more than double the previous quarter.

TV sales have continued to grow in the runup to the transition, despite the economic downturn. The number of digital TVs sold in the U.S. has risen steadily since the technology's inception in 1998, and is expected to hit 34.6 million this year, up from 32.7 million in 2008.

FLO TV: Live Service on Mobile Phones

One of the strongest segments of the business is flat-panel TVs. The number of flat-panels sold was up 25% for the first four months of 2009, according to market researcher NPD Group. Ross Rubin, a consumer electronics industry analyst for NPD Group, says continued growth in TV sales is at least partly due to people switching to bigger and better sets as the digital switchover neared. "Flat televisions have been one of the bright spots in consumer electronics this year. It's in part due to lower pricing, but some of it is the digital transitions—both the real one and the false alarm," said Rubin.

While the digital switchover will leave people like the Ortezes without Law and Order and their other favorite shows, it will make new kinds of service available to others. The radio spectrum that was used for analog television signals will now allow Qualcomm's (QCOM) mobile television service, FLO TV, to be sent nationwide to the customers of AT&T (T) and Verizon Wireless. Those companies are marketing the service so that people who sign up for special entertainment packages will be able to watch live TV on their mobile phones, perhaps as they commute through the Bronx or elsewhere.

Ortez says he hopes not to be without TV for long. He's trying to get his hands on a converter box so that he and his wife can start watching shows again soon. "Being that we are unemployed and at home so much it keeps us entertained and up with current events," said Ortez. "TV is such a big part of our lives. It's always been there for us. Now we can't even watch TV, it's really crazy."

Schectman and Deprez are reporters at BusinessWeek.

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