1998 Ad

Television Digest with Consumer Electronics, Jan 12, 1998

Shape of expected FCC decision on DTV allotments is less clear than timing, largely because most commissioners are too new to have focused on issue and because text of proposed decision wasn't due on 8th floor until Fri. or today (Mon.), officials said. There seems to be significant support for allotment table modifications designed to solve recently discovered adjacent channel interference problems, staffers said, because alternative would handicap DTV unduly. Staffers are less clear about recently proposed MSTV "de minimis" standard for DTV interference, but there's some support for anything that reduces govt. role. Higher power levels for UHF DTV stations may be among most difficult issues, some say, because of concerns that appeal simply is effort to increase stations' service areas, rather than reaction to real problem.

Cable should be required to pass through HDTV programming, Ness said, in discussion of round of DTV decisions that's likely later in year. She said she hasn't decided on must-carry for multicast standard-definition broadcast signals, but she would be "reluctant to mandate carriage of programming that duplicates cable networks" if stations use multicasting to carry cable networks. Broadcasters in audience said cable should have to carry full 6 MHz DTV channel, regardless of whether it's used for HDTV or multicast, and CEMA Pres. Gary Shapiro said he's "fairly confident we [set makers] will stand by your side on that."

Cable carriage will be key to DTV success, said Todd Thibodeaux, CEMA vp-senior economist: "Without full support, there will be seeds of doubt in consumer minds. They will worry that [DTV] will be the next Betamax." Concerns about cable carriage of DTV may be overblown, said James Meyer, COO of Thomson Consumer Electronics: "I don't think cable wants the status product of the next 5 years to not be available over their networks. They're upgrading their networks to stay competitive, and they don't want to lose their most profitable customers." Robert Minkhorst of Philips said cable "won't be a spoiler" because there will be "a tremendous amount of programming" available over air and by DBS: "Cable will have to carry it if it wants to be competitive."

Ness "would like to see [DTV] set prices at consumer-friendly levels," she said. She said FCC "must take steps to maintain [LPTV stations] to the extent we can do so without impairing full-power stations." She suggested that possibilities include giving them access to vacant channels, carrying some on full-power stations' multicasts, making it easier for them to get channels after transition.

Broadcasters had much larger presence than usual at CES, which was expected to top 100,000 attendance, well above CEMA projections, with many engineers and station owners seeking assurances that sets would be available when they begin DTV broadcasts, and equipment will be available to handle broadcasts. Much of rhetoric at panel sessions and news conferences involved broadcasters and set makers urging each other to move quickly on DTV.

Broadcasters repeatedly reminded set makers that some stations already are airing rudimentary HDTV broadcasting, with CBS Senior Vp-Technology Joseph Flaherty complaining that there still are more DTV transmitters than receivers. "Broadcasters' number one issue is the cost of sets," said Harris Corp. Chmn. Philip Farmer. Flaherty said CES will be "major turning point" in generating enthusiasm about HDTV.

CEMA forecasts on speed of consumer acceptance of DTV were bullish. Thibodeaux predicted 30% DTV set household penetration by 2006, and 75% by 2012, with annual sales reaching 10.5 million by 2006. He said DTV set-top boxes may be in more than 75% of households by 2006. Consumer focus groups have shown "realistic" price expectations, Thibodeaux said, which he defined as about $5,000 for 50" projection set. Rebo Studios Chmn. Barry Rebo agreed price won't be big factor, saying consumers "will finance anything."

Optimistic projections are justified, Thibodeaux said, because 18 million households already have paid $2,000 for at least one large-screen NTSC set, and he estimated that half of them will be ready for replacement by time DTV sales begin to ramp up. About 30 million households already are spending $1,500-$2,000 per year for what he defines as "early adopter equipment," including PCs, so "there will be no sticker shock." Panelists' projections of DTV sales also were bullish, with Thomson COO James Meyer predicting 20,000-100,000 sales in first year. When asked when one-millionth DTV set would be sold, Farmer and Circuit City Chmn. Alan McCollough predicted late 1999, Flaherty early 2000, Microsoft Senior Vp Craig Munidie 2000 or 2001.

"Great pictures alone are probably not enough to justify the price" of DTV sets, Thibodeaux said. He said focus groups indicate that such features as built-in Internet access capability and electronic program guides are considered important to justify price differential.

NAB convention in April is "critical" to DTV success because stations can't begin DTV broadcasts if there isn't enough DTV equipment available, said Rebo, who has been active for years in HDTV production. Jay Adrick, Harris Corp. vp-systems, said equipment will be available because: (1) At least 14 companies are planning to provide DTV encoding equipment, with competition meaning prices will fall. (2) At least 5 companies will show DTV internal station distribution equipment at NAB. (3) New video storage formats and DTV cameras will move from prototypes to real products by NAB. He said Harris study shows that all equipment that stations need for DTV is available, "though with some work-arounds." He said there are "fewer [equipment problems] to bridge every day."