Mainland television set-makers are viewing plans by United States regulators to convert the entire country to digital TV with a mixture of excitement and trepidation. The plans, under which all new TV sets will be digital-capable by 2007, could stimulate exports for Chinese manufacturers. At the same time, the companies say, uncertain demand and the cost of modifying production lines to turn out digital sets pose potentially heavy risks. 'A mainland TV set-maker which does not have the capability to produce digital TV sets will have to spend seven million yuan (about HK$6.62 million) to eight million yuan to adapt an ordinary TV set production line to models with built-in digital TV tuners,' said Liu Xiaorong, vice-chairman of Skyworth Digital Technology, which is a wholly owned subsidiary of China's third-largest TV maker Skyworth Digital Holdings. Chinese manufacturers have carved out a niche selling low-end analogue TV sets in the US, although their market share remains negligible beside the Japanese and Korean electronics giants which dominate. The US Federal Communications Commission, the broadcast and communications industry regulator, has adopted a phase-in plan for digital TV tuners. Initially, 50 per cent of large TV sets - those with screen sizes of 36 inches and above - will have to include digital TV tuners by July 1 next year. The requirement will be extended to all large TVs by July 1 the following year. The same requirements will apply to smaller sets from July 1, 2007. The FCC's strategy is aimed at promoting the take-up of digital television while minimising costs for consumers. It promises to ratchet up demand for new sets as consumers increasingly switch to digital. However, there are doubts over how quickly the new technology will be adopted. In areas of the US where digital TV broadcasts can be received, the household penetration rate is only about 30 per cent to 40 per cent. Digital programming offers the capability to add extra layers of information and entertainment to conventional programmes. However, digital broadcasters and programmers have yet to design and popularise interactive programmes for a paying audience. If demand fails to pick up quickly, low-end manufacturers who have shouldered the investment cost of gearing up to produce digital sets will suffer. Marketing the digital sets, which are more expensive than ordinary models, also exposes TV-makers to higher risks. A high definition TV set with a built-in digital TV tuner sells for about US$3,000, while without the device it would top US$2,000. The Consumer Electronics Association (CEA), a US trade association, opposed the FCC plan, saying that phasing in digital tuners in TV sets would place an unreasonable burden on TV makers. About 81 million TV sets in the US, or more than 30 per cent of the total, still relied solely on free, over-the-air broadcasting, according to FCC chairman Michael K. Powell. Skyworth, which already has the capability to produce digital signal decoders for digital versatile disc (DVD) players, said it would need to spend only two to three million yuan to adapt a production line to digital sets. Mainland manufacturers said consumers should be allowed to choose cheaper ordinary TV sets and add external digital signal decoders when they could afford to convert. This would minimise risks for set-makers, they said. A digital set-top box, which converts an analogue TV to enable it to receive digital signals, costs about US$500. A tuner (the inbuilt component that makes a set digital-capable) costs US$200. Both Skyworth and its domestic rival TCL International Holdings said they were interested in the US market but would take a cautious approach. They said they would probably make their first forays into the digital market as original equipment manufacturers for global brand names. The mainland's largest TV maker, Sichuan Changhong Electric, said it had the capability to produce digital TV sets and had been exporting them to the US market since 2001. 'As the world's second-largest maker of television sets, we will gear up to seize opportunities generated by the US plan to convert to digital television,' said Liu Haizhong, a deputy chief of the sales and planning division.