If cable doesn't give people what they want, somebody else will

Cable World,  August 11, 2003  

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Byline: MIKE LUFTMAN

Why is high-definition television like cod liver oil? For our parents' generation, cod liver oil was an evil-tasting dietary supplement force-fed to them by our grandparents. According to tradition (and quite a few movies from the 1930s) the force-feeding was usually accompanied by words like: "Swallow it all down, it's good for you!" In the movies, the unhappy cod liver oil consumer then mugged a look of disgust for the camera and ran off in search of a glass of water to wash away the foul taste. A few cable operators have felt the same way about adopting HDTV. They know the government, broadcasters and TV manufacturers think HDTV is good for them, but it doesn't go down very easily.

To a degree, that's understandable. HDTV sops up a lot of bandwidth, requires expensive boxes and technical training, and all this for a tiny minority of customers. But, all in all, even though HDTV may not seem very palatable, a look at the facts shows it really is a good thing for cable.

Yes, it's true not many customers have HDTV sets - less than 1% of the TV population right now. But more than half of American television homes are served by cable systems that offer HDTV, a total that has grown by an impressive 50% this year alone. And the folks that have HDTV sets are our best customers: early adopters with great demographics. For example, surveys show nearly half of high-speed online customers say they plan to buy an HD product in the next 18 months. The simple fact is cable needs to serve these people or someone else will, namely DBS.

The good news is that while HDTV is a bandwidth challenge even for rebuilt cable systems, it's a much bigger problem for DBS, which always will have a bandwidth disadvantage to cable. So carrying a robust HDTV lineup is doubly helpful to cable: It serves our best customers and forces DBS to soak up precious bandwidth to have a competitive offering, leaving that much less for other services. Beyond that, it's a clear benefit for cable to be perceived by the public as the unquestioned leader in providing the widest array of services and the most advanced technology compared to DBS and the phone companies. The first days of color TV may be an apt analogy. NBC made an early commitment to color before any other network, and well before many homes had a color TV. But color caught on, and NBC's peacock image conferred a mantle of quality and leadership that benefited the network for years.

Fortunately, most big MSOs understand this. But it's important that all cable operators get it, too. Because, remember, HDTV is not only smart from a business standpoint. It's been mandated by the U.S. government as "a good thing." So far none of our competitors have succeeded in tarring cable with the spoiler role in the HDTV rollout. But the industry can ill afford to be branded as a roadblock by those who would offer digital must-carry as the solution. Forgetting for the moment that voluntary HDTV carriage is just good business, defusing any effort at digital must-carry is, in and of itself, an important goal.

Finally, HDTV will flourish as a product simply because it transforms the viewing experience. The clarity of its images and the vividness of its colors makes any program more fun to watch. And its transformational quality is even more dramatic with sporting events like football and hockey. For football fans, the clarity permits wider camera angles that make the experience much more like actually being in the stadium. Armchair hockey fans are able to follow the puck as if they are in the arena. So HDTV will prevail because our customers will require it of us. Cable's choice is only whether to lead or to follow. So, if you think about it, the decision is simply a no-brainer. Anyone in cable who is hanging back from a full commitment to HDTV must understand that it's not cod liver oil; it's part of the icing on the cake.

Mike Luftman is a paid adviser to Time Warner Cable. The opinions stated in his columns are his alone and do not reflect the positions or policies of Time Warner Cable. He is also a consultant to companies in the cable and communications sectors. He currently resides in Rye, N.Y., and may be reached at michael_luftman@hotmail.com.

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