Recognizing that earlier proposed systems demonstrated particular strengths in the Advisory Committee on Advanced Television Service (ACATS) testing and evaluation process, the Grand Alliance system was proposed to combine the advantages of all of the previously proposed terrestrial digital HDTV systems. At the time of its inception, the Grand Alliance HDTV system was specified to include:
Audio and transmission systems had not been decided at the time of the GA agreement. Five channel audio was specified, but a decision among the Dolby AC-3, multi-channel MPEG-1 Layer II (MP2) audio, and MIT "AC" systems had not yet been made. Candidate transmission approaches included QAM, Spectrally-Shaped QAM, 6 VSB (with trellis code) and 4/2 VSB. COFDM had been proposed by third parties, but was rejected as not being mature, and not offering fringe-area coverage equivalent to analog transmission. A thorough analysis of service area, interference characteristics, transmission robustness and system attributes would be performed to determine the "best approach."
In the end, 1080- and 720-line resolutions were implemented, together with 8-VSB modulation and Dolby AC-3 audio. However, the selection of transmission and audio systems was not without controversy. The choice of 8-VSB was later criticised by several groups as being inferior to COFDM under conditions of multipath. Improvements in receiver designs would later render this apparently moot. With MP2 originally faltering during GA testing, the GA issued a statement finding the MP2 system to be "essentially equivalent" to Dolby, but only after the Dolby selection had been made. Later, a story emerged that MIT had entered into an agreement with Dolby whereupon the university would be awarded a large sum if the MP2 system was rejected. Following a five-year lawsuit for breach of contract, MIT and its GA representative received a total of $30 million from Dolby, after the litigants reached a last-minute out-of-court settlement.