Sunday, February 25, 2007

Two Years and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than two years until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease (when this deadline was announced, it was just about three years in advance of the date). This is the 11th of 35 planned monthly recaps of developments affecting the various players (laid out in my first few posts) in this story. Here's some of what happened (or was commented on) between 1/18 and 2/17. Major news sources for this update include Multichannel News, TVPredictions.com, Engadget HD, TV Week, and TWICE.

THE PUBLIC - Two months ago, in this section I mentioned a study which found that the percentage of new HDTV owners who looked forward to seeing HD programming was now a minority. So it's with a bit of relief that I direct your attention to this report that adoption of an HD service package by existing owners has now risen above the 50 percent mark (from the 36 percent in an August study). Putting the two together suggests that owners do have a tendency to find their way to HD service over time.

Less optimistic are some findings from the Association of Public Television Stations. Surveying over-the-air viewers, they found that 61 percent had no idea the digital transition was taking place, and almost half (given a range of options as to what they would do to get digital signals) picked "do nothing" or "don't know". Given that the press release also states that there are more than 21 million U.S. households who rely exclusively on over-the-air reception, these kind of figures are highly troubling with only two years to go (BTW, the version of the press release I've linked to is prefaced with some comments from DTV pioneer Dale Cripps).

Perhaps findings like this are starting to light a fire under the various industry groups who are affected by this, which may be why three groups who are often at odds (the National Cable and Telecommunications Association, the National Association of Broadcasters and the Consumer Electronics Association) have gotten together to plan a joint public service campaign, which has already won praise from House Energy and Commerce Committee chairman John Dingell. I've been fairly skeptical of these campaigns in the past, but the combined strength of these three organizations just might accomplish something. I'll keep an eye on this one.

BROADCASTING - Just like last month, the big story in broadcasting this month involves the issue of retransmission agreements with cablecos over high-def signals, with broadcasters arguing for fees that are closer to that paid to cable channels, despite the fact that broadcast signals are also available free over-the-air. And the biggest story within that story continued to be the struggle between cableco Mediacom Communications and Sinclair Broadcasting over the 22 stations the latter pulled from the former. Both sides found support, with leaders of the Senate Commerce Committee urging the FCC to settle the dispute, while CBS executives and the Iowa Broadcasters Association advocated a hands-off approach. Eventually, the two companies reached agreement, just in time for the Super Bowl (Sinclair already having done likewise with Time Warner). But this was hardly the end of the story, as Sinclair plans to double overall retransmission fees this year (compared to last), CBS is making no promises that they won't eventually adopt the same stance with its owned-and-operated stations, and lots of other station owners are getting into the act. It looks like we as consumers can eventually expect these costs to be passed on to us.

Meanwhile, PBS would just like to get all their digital signals carried.

The slow trickle of HD nightly local news announcements continued as well, with Cleveland becoming the first city with three HD newscasts (if Cleveland can have three, what's our excuse in Boston for not having any?). But this was overshadowed somewhat by the announcement that NBC will soon have the first national nightly HD newscast. Supposedly this will happen sometime in March. Back in April Sony announced that their HD production partnership with PBS would result in an HD version of The NewsHour with Jim Lehrer this spring, but I've heard nothing since, so it would seem NBC's "first" is safe.

In other news, UFC pay-per-views are going HD, but the one HD episode of King of the Hill will be all for now due to a dispute with producers over aspect ratio (Fox would like to see HD animation adopt a 16:9 frame, producers aren't eager to make the change). There's been a lot of online comment over the effects of mullticasting on HD quality. Ken Aagaard from CBS Sports agrees with the critics of this practice, but says he has no control over his HD signal once it gets to affiliates and others. I've talked about the slow progress of HD advertising before - this Boston Globe article updates the situation. Finally, I'm not sure if this qualifies as "broadcasting", but you might be interested in the NBA's plans for 3-D HD showings of live games in movie theatres and stadiums.

PROGRAM PROVIDERS - After DirecTV's big "100 channels" announcement last month, you'd think there'd be a little more detail by now, but there was nothing announced to update the short list of channels DirecTV announced (Weather Channel announced after 1/17), not even confirmation from announced names like USA, SciFi and FX. Seems like DirecTV were definitely jumping the gun on this one, leading me to suspect that many of these channels will be rushed into production and remind us more of A&E HD than Discovery HD Theatre. Of course, this all may be affected by the recent rocket explosion on the Sea Launch platform that could delay the launch of one of the two satellites that DirectTV is supposed to be adding but analyst comments suggest that the real impact may fall on their local HD strategy rather than their national plans.

There's some other DirectTV news as well. While they had already changed some of their ads (including the one starring Jessica Simpson) claiming to beat cable's HD quality in response to a Time Warner lawsuit, they have now been ordered to pull them altogether by U.S. District Judge Laura Taylor Swain (DirecTV maintains that this only applies to Time Warner markets). Having achieved that victory, Time Warner now has their sights set on those Back to the Future ads touting DirecTV's coming supremacy in HD capacity (TW say that new technologies will help them catch up). But none of these challenges stopped DirecTV from having a very good quarter.

As far as DirecTV's biggest competitors go, there's not much news from Dish, except that they added A&E HD (like I said, not much...). Comcast had more significant news, testing switched video as a way of expanding HD capacity while simultaneously lowering expectations by having COO Steve Burke announce that they won't try to match DirectTV channel-for-channel. Cable360.net looks at the strategies that Comcast (and tiny Wave Broadband) are using to stay competitive in this new environment. Comcast are also out of the running for overbuilder RCN.

Moving on to the telcos, MultiChhannel News looks at the effect that competition from FiOS is having on the regulation of basic cable services. Not having such a big effect is AT&T's U-Verse service, which in spite of rolling out to 10 new markets, has made no headway in subscriber numbers.

HD NETWORKS - As mentioned above, there's been little solid follow-up to the big announcement from DirecTV. But at least there's a little more HD coming from existing networks, as ESPN and ESPN2 move 1st and 10 and Cold Pizza to their high-def studios in Bristol, CT in June.

One of my favorite programs with which to demo HD is Discovery HD Theatre's Sunrise Earth, which is now taking suggestions from viewers as to which locations to shoot next. Definitely not on the list of things I would choose to demo HD is anything upconverted using TNT HD's "stretch-o-vision" process, so I was surprised to see how much conscious thought went into the process, and that it even has a real name (FlexView). At least the linked article suggests that there will be less and less need for this as time goes on.

MANUFACTURERS - It was only two months ago that I noted a growing perception that Sony might be beginning to lose the next-gen DVD format war. How quickly things change! Since then the high levels of interest shown by PS3 owners in actually getting some use out of their included Blu-ray players have helped to change that perception, and this month's news will likely accelerate that trend. For starters, the numerical superiority of studios supporting Blu-ray has finally caused Blu-ray to catch up and then pass HD-DVD in number of titles available. As far as sales go, the NDP Group says that stand-alone sales (from April to December) of the two formats put HD-DVD players only slightly ahead (if you add in the sales of PS3s and the HD-DVD add-on drive, it's Blu-ray that's well in front). Figures get more dramatic when you look at January disc sales, where Blu-ray discs outsold HD-DVDs by 2:1 in the first week, and nearly 3:1 in the second week. And later this year at least one hardware maker will be putting downward pressure on Blu-ray prices, eroding one of the few HD-DVD advantages. In fact, the only good news (for HD-DVD fans) that I was able to find was the announcement of a third source for HD-DVDs (CBS Home Entertaiment, which will release TV content on DVD, HD-DVD and Blu-ray) later this year. But as Ben Drawbaugh of Engadget HD points out, it is way too early to sign off on Sony's recent "war is over" declaration.

In other hardware news, there's been little attention paid to an upcoming milestone in the transition, the March 1st implementation of the final phase of the FCC tuner mandate, where every device with an analog TV tuner will also have to have a digital one. That's right, the traditional analog TV that has entertained countless millions for decades has just a few days left to live. No telling how long it will take existing stocks to sell out, but it's worth noting that the larger sets that were affected by the 3/1/2006 mandate last year were gone from the stores a few weeks later. And "every device" refers not just to TVs, but anything with a tuner. This TWICE article explores the ramifications for the recorder market. Another FCC mandate is the one covering cable set-top boxes, which as of July 1st must replace integrated circuitry controlling access with an interface to next-generation CableCARDs (see last months GOVERNMENT section). Although Comcast is fighting for a waiver from the process, and the fines for non-compliance may not be all that much, various manufacturers are rushing to market, and devices should start showing up soon.

1080P broadcasting may be a ways off, but manufactures are beginning to show the equipment. Texas Instruments is demoing 720P on mobile phones. What I want to know is, how could you tell the difference at that size?

There's news on the retail front as well. While booming HD sales might seem like an unambiguous win for retailers, shrinking profit margins due to pressure from discounters are causing Circuit City to shrink themselves. And high-end retailer Tweeter is predicting yet another price war (this one over 1080p) later this year. Meanwhile, LCD HDTVs scored a milestone in the third quarter when global sales revenue caught up to plasma for the first time, though they may be facing their own profit squeeze.

GOVERNMENT - Last time in this section I wrote about the lack of a backup plan to deal with massive loss of reception on 2/19/09. Having watched National Telecommunications and Information Administration chief John Knauer on C-SPAN, I would characterize his position as one of unquestioning faith in local broadcasters' willingness to do whatever is necessary to make sure that all their viewers are in the know at the appropriate time. But a lot of people in the public sector aren't quite willing to take that on faith, and most of this month's items deal with various actions those people are taking.

First up is a bill introduced by three House Republicans designed to force broadcasters to provide reports to the FCC on their consumer-education efforts, and to also mandate that the FCC inform Congress, but which fails to provide additional funding or a specific plan. It also mandates warning labels on analog TVs, which won't be necessary after this March 1st (see MANUFACTURERS section). Meanwhile, the FCC is asking for $1.5 million in its 2008 budget for a DTV education campaign. Correct me if I'm wrong, but I don't think that kind of money buys very much these days.

We've been hearing about converter-box subsidies for some time now, but we're now starting to learn the details of implementation. Under the President's new budget, coupons (two per household) will be available Jan 1st, 2008. It should be noted, however, that boxes won't be free, just partially subsidized (to the tune of $40 per box).

Of course, there's always the possibility that something will stop the whole mandatory transition process in its tracks. Using some differences in House and Senate language in another section of the larger Deficit Reduction Act of 2005 (that included the analog cutoff), Public Citizen has sued to overturn the entire DRA. However, even their own attorney admits that four previous challenges to the DRA have lost, so I'm not too concerned about this yet.

And that's all I have for now!

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