Historians tend to look for events that represent a turning point in the prevailing views of those affected by historic changes. History is likely to look upon a succession of events that have unfolded since the beginning of 2004 and conclude that we have reached the turning point in the slow-moving transition to digital and high-definition television.
The year began with the revelation that consumers are beginning to embrace a new generation of display technologies that may eventually relegate the venerable CRT display to the scrap heap of history. Thin is in, whether it takes the form of an LCD or plasma panel, or a slimmed-down big-screen rear-projection system based on an LCD or DLP display engine.
In early January, USDTV announced an ambitious plan to compete with cable and DBS by offering a package of 20 to 30 channels, delivered by local DTV broadcasters, for $19.95 per month. The Salt Lake City-based company is leasing “unused” portions of the DTV channels operated by broadcasters in each market to deliver popular networks offered by competing multichannel services, alongside the SD/HD programming offered by the DTV broadcasters in each market served. Wal-Mart is working with USDTV to promote the service and sell the HDTV-capable set-top box needed to receive it. The set-top box costs $99 with a USDTV subscription. Wal-Mart is selling the receiver, manufactured in China by Hisense, for $199 in markets not currently served by USDTV. When USDTV begins to serve those markets, owners will be able to add the smart card needed to activate the subscription service.
Currently, USDTV has about 8000 subscribers in three beta test markets: Salt Lake City, Albuquerque and Las Vegas. By the end of this year, they expect to offer the service in 30 markets, along with an improved receiver that will use a fifth-generation ATSC receiver chip developed by LG Electronics.
Receiving DTV
In July, the first of a series of FCC receiver mandates kicked in. Now a minimum of 50 percent of all receivers with screens 36 inches or larger are required to include an ATSC receiver. In the next few years, the mandates will require 100 percent of receivers (of all sizes) to include an ATSC receiver and support for the broadcast flag content protection system.
The marketplace reality is that virtually all of the receivers that include an ATSC tuner also include a one-way, cable-ready digital tuner and support for the broadcast flag. Another emerging market reality is that the cost for a receiver that meets all of the FCC mandates is beginning to decline.
Also in July, one of the nation's largest and most outspoken station groups, the Sinclair Broadcast Group, announced that the fifth-generation ATSC receiver developed by LG Electronics has largely resolved the reception issues that have plagued the DTV transition. Sinclair was the primary advocate of changes to the FCC power rules that now allow stations to maximize the power levels for UHF channel assignments. Several years ago, Sinclair conducted a series of reception tests in Baltimore, comparing the 8-VSB modulation system with the COFDM modulation system to demonstrate problems with 8-VSB reception due to multipath. The COFDM system handled the multipath issue far better at that time. According to Sinclair, recent evaluations of the fifth-generation LG receiver, at the same sites used in the earlier tests, indicate that the multipath issue has now largely been resolved.
2004 also will be remembered as the year affordable HDTV production became a reality. Apple Computer and Avid Technologies demonstrated a range of HDTV production solutions that leverage the tremendous increase in computer processing power driven by Moore's Law. In essence, the same computer-based tools that dominate standard-definition video production are now scaling up to handle high-definition production. Equally important, most new computer designs have adequate processing power to store and display HDTV quality content, which is, in turn, enabling the deployment of a new generation of HD-capable displays for digital signage applications. The last remaining barrier to widespread adoption of HD production is the cost of HD cameras and professional recording systems. But this barrier is expected to crumble in the next few years.
It's the content, stupid.
Unquestionably, the most important development in 2004 is the growing availability of HDTV content, especially the coverage of live sporting events. The broadcast networks are getting on the HDTV bandwagon, with significant increases in the amount of prime-time HD programming. FOX and UPN will offer many of their prime-time programs in 720p. Also, FOX will offer six NFL games every week in 720p. NBC provided time-delayed coverage of many Olympic events in HDTV and plans to offer more prime-time HD programming this season. ABC and its cable sibling ESPN-HD will cover all of their NFL games in 720p.
But a question remains: What are HD-enabled consumers really looking for? The cable industry is moving rapidly to upgrade its premium subscribers to new digital and HD program tiers. HD is becoming synonymous with premium, as more HD cable networks and HD VOD offerings roll out. And both cable and DBS services are adding HD personal video recorders to their set-top box offerings.
It is less clear, however, that HD is an adequate incentive for upscale consumers to drop their current multichannel subscription service in favor of an antenna to receive USDTV or “free TV.” One significant factor is the growing demand for broadband Internet services by U.S. consumers. Cable currently enjoys a significant advantage over DBS — bundling broadband, TV and often telephone services on a single bill. To combat the cable advantage, the DBS providers are teaming up with the regional telephone companies to offer their own service bundles. DISH Networks has achieved significant subscriber growth in markets where it has teamed up with SBC to offer broadband, phone and TV bundles.
This suggests that broadcasters may be well advised to begin discussions with the telephone companies in their markets to offer service bundles. Broadcasters lack the infrastructure to deal with customer-service issues, something that the regional telcos do well. And a high-speed “back channel” is likely to be a critically important requirement if broadcasters hope to compete in a world where consumers have more control over the content they watch, and where they have the desire to integrate electronic commerce with their traditional use of TV as an entertainment medium.
The power to compete
If this is indeed the turning point in the DTV transition, then broadcasters need to get on the bandwagon too. Do broadcasters really care about reaching an audience with antennas? In far too many cases, they have become comfortable with the current reality that the way to reach their audience is through the wires or satellites of their multichannel competitors.
But you can't place all of the blame on the broadcaster, given the troubled waters they have been navigating during the DTV transition. Nat Ostroff, vice president of new technology for the Sinclair Broadcast Group, bluntly lamented that broadcasters haven't been able to gain an audience for DTV until fifth-generation receivers came along. Ostroff is optimistic that these receivers will enable broadcasters to promote free HDTV.
Like many broadcasters, Sinclair limited its risks by operating its DTV channels at low power levels. The station group built out the transmission facilities but did not put high-powered output amplifiers into many of their DTV transmitters. In preparation for the new TV season, Sinclair is upgrading the facilities of most of its FOX-affiliated stations to pass through 720p signals from the FOX Network, and is upgrading transmitters to high power.
Perhaps even more important, the station group is about to do something almost unheard of in the broadcast industry: It is going to start promoting DTV through its legacy NTSC broadcast channels. Sinclair has developed a series of generic public-service announcements promoting the availability of free [H]DTV programming with an antenna. The spots can be viewed at a Web site created to promote DTV broadcasts (see “Web links”). Sinclair will offer the PSAs to broadcasters across the country, who can order a full-quality version for their stations to adapt and air.
Craig Birkmaier is a technology consultant at Pcube labs, and he hosts and moderates the OpenDTV Forum.
Web links
Sinclair DTV Web site and PSAwww.myfreehdtv.org
www.myfreehdtv.org/video.html
www.usdtv.com/
Send questions and comments to:cbirkmaier@primediabusiness.com
