Commerce Secretary Cool to HDTV Funding : Research by Electronics Industry Shouldn’t Depend on Federal Money, Mosbacher Says

WASHINGTON —  Commerce Secretary Robert A. Mosbacher, who is leading the effort within the Bush Administration to develop a policy on high-definition television, Tuesday dashed the electronics industry’s hopes that the federal government would bankroll its long-awaited $1.3-billion development proposal.

Mosbacher told the Senate Commerce Committee that he is skeptical of any plan for developing the next generation of television technology that calls for large government subsidies. “The problem is that they are hoping Uncle Sugar will fund it, and I don’t think they should depend on that,” Mosbacher said.

While reiterating his support for tax incentives and antitrust exemptions to allow joint manufacturing of HDTV, as it is called, Mosbacher appeared to put a major roadblock in the way of the fast-moving HDTV bandwagon. However, many influential members of Congress continue to support major government funding for HDTV, and it is not clear how the electronics industry will respond to the Administration’s emerging stance.

Determining Role

The Bush Administration is still in the process of determining what its role should be in fostering a revival of the U.S. consumer electronics industry, Mosbacher said, adding that he has “serious doubts about throwing money at the problem.”

HDTV promises to bring a much higher quality of picture and sound to home television in the 1990s and is expected to help spur major leaps in imaging and other technologies useful in a wide range of electronics applications.

Another top Commerce official, Wayne Berman, said after the hearing that large government subsidies for HDTV “sound like synthetic fuels to me.” The comment by Berman, who heads an interagency task force on HDTV, was a reference to the fiasco that resulted after the federal government agreed in 1980 to provide huge loan guarantees to develop several synthetic fuel projects that failed when oil prices collapsed.

After Mosbacher’s testimony, which left a number of Democratic members of the committee expressing anger about his stance on funding, the American Electronics Assn. presented its plan aimed at encouraging U.S. firms to catch up with Japanese and European rivals in the race to develop the technology.

As reported Tuesday, the proposal calls for the Pentagon to step up its current plans to spend $10 million a year on HDTV research and development. It seeks $100 million a year over the next three years. It also urges the government to make available low-cost loans and loan guarantees of $1 billion to support U.S. companies that join together to manufacture HDTV products.

The plan includes a previously undisclosed proposal in which the government would control licensing rights for HDTV technology. The government would own the patents and would license companies to use them, with fees depending on how much research and manufacturing a company--either foreign or domestic--is prepared to do in the United States.

“It is not protectionist,” AEA Vice President Pat Hubbard told reporters at a news conference. “The licensing arrangement would allow anyone to participate, but they would have to pay more” if they are not prepared to do much of the work in the United States.

In her testimony to the Senate panel, Hubbard told lawmakers that “the long-term leadership of the U.S. electronics industry is under serious threat today. HDTV “offers a once-in-a-lifetime gateway for U.S. re-entry into consumer electronics.”

Democratic lawmakers on the Senate committee, who turned out in unusually large numbers for the session on the popular HDTV issue, chided Mosbacher for not seeking more funding for Commerce Department activities aimed at helping U.S. industries compete against foreign rivals.

Remarks by Hollings

“In field after field, America is literally going out of business,” said Sen. Ernest F. Hollings (D-S.C.), chairman of the committee. He called the AEA report a “landmark study” and insisted that “private industry can’t do it alone” in a wide variety of advanced technologies.

Hollings also questioned why Mosbacher kept talking about the Bush Administration’s new “industry-led” approach to U.S. competitiveness issues. “We don’t need a new philosophy,” he said. “Don’t we really need new money?”

After the hearing, Mosbacher sought to play down the claim of several lawmakers that the future of the entire U.S. electronics industry is dependent on success in the HDTV field.

“That’s a little melodramatic,” he told reporters.