Sunday, June 03, 2007

21 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 21 months until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease. This is the 14th of 35 planned monthly recaps of developments affecting the various players (laid out in my first few posts) in this story. Despite the name of this blog I do cover some stories (like the growth of HD) that are not directly transition-related (but strike me as being of interest to transition-watchers). Here's some of what happened (or was commented on) between 4/18 and 5/17. As usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TVPredictions.com and TWICE.

THE PUBLIC - Not a whole lot of action on this front this time, but I did find a few items of interest. One of the constituencies that people tend to worry about in term of their DTV awareness is seniors, so it's interesting that Retirement Living TV co-sponsored a panel (with the National Cable Television Association) on seniors and the transition at the NCTA's recent convention. This writeup is quite brief, but does contain links to three short clips. Judging from those clips, this appears to be an entry-level discussion aimed at the channel's audience of seniors rather than at the industry people attending the convention, so presumably RLTV taped this for later broadcast (else why have a discussion your audience isn't going to hear?).

The group that appears to positioning itself to do much of the heavy lifting in public education is the previously-discussed DTV Transition Coalition, and their list of participating organizations appears to be expanding outward from their original base in the broadcast, cable and consumer electronics sectors to include local governments, community groups et al. That's good news, but it may still be awhile before we see any concrete effects (The National Association of Broadcaster's massive PSA campaign isn't scheduled to kick off until spring '08). They can't start too soon, if the figures in the latest survey from Leichtman Research Group can be believed (23 percent of sets, which works out to about 70 million, are not currently hooked up to cable or satellite service).

GOVERNMENT - he number I just quoted above is the kind of thing that makes some people wonder whether we can leave things entirely in the hands of the private sector. People like FCC Commissioner Michael Copps, who's advocating a public/private partnership approach, and faster action than that embodied by the above-mentioned NAB schedule. Or Representative Rick Boucher, who would like more funding for the converter-box coupon program. He would also like Americans to be better-informed of the shortcomings of any analog sets that might still be out there on retailers' sheves, so he was probably pleased to hear of the new FCC order to post warning labels on those sets (from what I've seen, this also applies to on-line operations).

Another FCC proposal (expanding cable's "must-carry" obligations to include both digital and analog versions of local stations after those stations stop analog broadcasting on 2/17/09) reached the "notice of proposed rulemaking" stage April 25th over the objections of both Comcast and the National Cable Television Association, whose president Kyle McSlarrow branded it a "completely unnecessary government intrusion into the marketplace". In later speeches, McSlarrow continued the theme, suggesting that government intervention in the video business is unnecessary due to the highly competitive nature of the business, and even endorsing a proposal to radically reduce the FCC's oversight authority . Also among the things he considers unnecessary is FCC Chairman Martin's support of mandated "a la carte" , and in this McSlarrow recently got some support from House leaders.

Also going at it lately are the NAB and the American Cable Association (mostly representing smaller cable outfits) over the ACA's plans to lobby members of Congress regarding retransmission and downconverting.

One last piece of FCC news; they have granted waivers to Charter and two smaller operators exempting them (for the time being) from the July 1st ban on set-top boxes with integrated security features.

BROADCASTING - After a quiet month last time, there was more retransmission-related news, with the release of financial results showing that the issue has hurt Mediacom (which had a memorable battle with Sinclair Broadcasting over carriage of their stations), while helping broadcaster Hearst-Argyle. Now Spanish-language broadcaster Univision wants into the act, even though they lack the HD signals that were largely responsible for starting this fight in the first place. All of which makes Motorola's plan to demo a cable box with built in ATSC tuner that much more significant (this is a first implementation of the Cable Television Laboratories specification that was discussed in March).

The slow expansion of HD local news continues. A count taken on 4/27 showed 45 stations broadcasting their local news in HD, and on May 14th the Boston area joined that list for the first time as HD leader WCVB (their Chronicle newsmagazine show had its first HD broadcast in 1999) debuted their HD newscast. We don't know when other local stations will follow suit, but the local CBS affiliate is in the process of implementing some of the necessary technology, so I'm guessing that they will be next.

HD was also spreading in other areas. CBS announced that it will be doubling its HD football schedule, ABC countered by presenting the Indy 500 in HD for the first time (with ESPN handling the cable end) and also unveiled plans to stream HD on ABC.com (but see my next recap for some qualifiers that surfaced after 5/17). After some earlier tests, WWE has decided to go forward HD for their three weekly shows sometime next year. And a new delivery service for syndication promises to make HD far more commonplace in that market. It's even spreading into the ratings - Nielsen will start tracking HD viewership soon.


PROGRAM PROVIDERS - Up until now, I've dealing with the news in this section one provider at a time, but there are some stories that concern more than one provider, and this time I'm leading off with those. With the floodgates opening on new-channel announcements to fill up that space promised by recent DirecTV announcements (see the HD NETWORKS section for details on new channels announced during the period), the race to expand HD capacity just got a lot more important. We know that DirecTV is approaching launch date for the first of their two new satellites. Recently Echostar (Dish Network) responded with the announcement of their own new satellites going up by year's end. And while I haven't read anything specific about Verizon FiOS' channel capacity, let's assume for the moment that a fiber-optic network will find a way to stay competitive. Where does that leave cable? This Multichannel News overview looks into the methods(including switched digital video) that various operators are considering. One of the more technically simpler ways is to speed the customer transition to digital and start cutting back on analog, and now Time Warner has cleared the decks for 100 HD channels in their Staten Island system. The article doesn't say exactly how they managed it - the claim was contained in court papers relating to their lawsuit against DirecTV.

Which brings us to our next story. With all the resources the providers are throwing into capacity expansion, they're bound to attach high importance to how all this is perceived by the public, so it's not surprising that they're willing to go to court over the matter. First there was the Time Warner suit over DirecTVs claims of superior picture quality, and more recently Time Warner went back to the well over DirecTVs claims to "soon" have three times the channel capacity (which is how their Staten Island experiment came to light). While they were successful in getting DirecTV to modify their PQ claims, they weren't so lucky in this latest attempt, but plan to push on. Another lawsuit (from DirecTV over these Comcast PQ claims was filed after the 17th, so more on that next time.

The various providers still managed to make news by themselves, of course. DirecTV's latest financial report showed HD's growing positive impact on their profit picture (and the associated investor call revealed that they still planned to get to 100 channels by year's end, at no additional cost to subscribers). So I have to wonder why their new portable receiver/display, at $1499 a pop, has no HD capability. HD has been a big factor in Comcast's results as well, although Steve Burke is still saying they don't need to be competitive in the number of HD channels they carry (another results story indicates that they'll be taking a go-slow approach towards replicating their above-mentioned Chicago experiment countrywide). Burke also recently proposed charging $30-60 to show HD VOD movies the same day they're released in theatres, an idea which did not go over well with theatre owners. Comcast is also expanding their partnership with Circuit City in opening a second Connect store to sell Comcast services along with the hardware needed to use them. Two more providers to credit HD for good numbers were Dish, who plan to add roughly six more HD channels this year, and Cablevision, whose HD subs have risen 85 percent in the last year.

Also adding subs at a high rate was Verizon FiOS, as might be expected from a service expanding into so many new areas (up to 769 TV franchises by the end of the first quarter!). They also had good news to celebrate on the statewide-franchise front, as bills in Florida, Iowa and Ohio moved forward. The other telco in the TV market (AT&T) expects to raise capital spending on its U-Verse IPTV service.

As a brief note of comparison to all the above activity, here's how things are going in Russia.

HD NETWORKS - As I noted above, this (4/18-5/17) was the month the floodgates finally opened in terms of new HD channel announcements. Significantly, three existing HD networks will expand the number of channels offered. Discovery, which has given us the widely-praised Discovery HD Theatre, will be launching six new channels in the next year (four in '07, two more in the first quarter of '08). They've named the four fall '07 launches (Animal Planet, TLC, Science Channel and the flagship Discovery Channel), but not the other two. With HD becoming the everyday standard, how long will Discovery HD Theatre stick around? At least until everyone has the bandwidth to add all those other channels, I would hope! Also going multi-channel is Starz Entetainment, who will be adding three channels (Starz Comedy, Strarz Edge and Starz Kids and Family). I remember one of the first things I read when I started following HD-related news was that Starz's then-CEO John Sie (who retired in '04) was a noted HD skeptic who tried to introduce a Widescreen SD version of Starz, thinking that was all any normal viewer would need. Times do change! Lastly, A&E Networks (which is just starting to get widespread carriage for its own HD channel) is bringing out History Channel HD in September. There were a couple of of new-to-HD entrants as well. Rural residents will get their own special-interest HD channel when RFD-HD launches in October. And a brand-new college sports channel (Big Ten Network) will be HD from the start this August.

More was learned about some already-announced launches. Weather Channel recently broke ground on their new HD studio and will be investing $50 million in the project, due for completion in 2008 (until then, Weather Channel HD will rely mostly on upconverted content). One of my pet peeves is the marked difference is the marked quality difference between studio and location shots in HD news, so I was happy to hear that CNN HD is planning to do HD field reports as well as the usual studio shots.

And while these two items don't qualify as launches, it's clear that both arts network Ovation and shopping network QVC are looking to the future in their production decisions.

While not as attention-grabbing, existing HD channels still managed to make some news. We already knew that Discovery's Planet Earth was a big hit, but the ratings show just how really huge it was, and Discovery HD Theatre showings were a major contributor. Not surprising, then, that they plan to do it again. They are also doing a test to help advertisers determine the effectiveness of HD ads versus those done in SD. Also working with advertisers to increase the number of HD ads is MOJO (the former INHD). ESPN will be continuing their series of HD conversions with World Series of Poker. Mark Cuban wants to know your ideas for new HD Net programming. And for those of us who've been frustrated at the lack of HD content on A&E HD, take note - their return to original scripted programming, while not explicitly stated, gives us some hope on that score.

MANUFACTURERS - As usual, we begin with the continuing NextGen DVD saga. Price cuts were big news this month, on each side of the aisle. Panasonic countered last month's Toshiba price cuts by dropping the price of its stand-alone player by more than half over its predecessor, to $599, and bundled five films into the deal as well. Toshiba hit back with a $100 rebate (bringing the price of their HD-DVD player temporarily down to $299, a price I'd be tempted by if I had some assurance that the format would stick around and receive greater studio support) and an ad campaign starring Michael Imperioli. On the disc sales front, late April saw announcements that Blu-ray had sold its millionth disc, and that HD-DVD had come pretty close. Of course, these are cumulative figures and HD-DVD did have something of a head start. Figures from early May showed that Blu-ray is still a solid leader in current sales, despite an organized one-day "buy-in" by HD-DVD fans. They've also maintained their lead in available titles, although that lead doesn't seem to be growing very quickly. All in all, Sony's confidence is high, as measured by this recent investment of $75.8 million to retool a plant for Blu-ray disc production. Still, at the end of the day it would have been better if this had all been settled at the beginning, as pointed out by the former president of Warner Home Video (one of the few studios trying to serve both camps). I know I'd be a lot closer to making a purchase if that were the case (I used to be a chronic early adopter, but those were different times, budgetwise).

Moving on to non-NextGen news, the one product most closely tied to the transition (other than digital sets themselves) is the converter box, and the slow progress in getting these to market has NAB President David Rehr worried about the consequences if these boxes aren't widely available on Jan 1st, 2008 (the day the coupon program is supposed to kick off). Perhaps manufacturers are waiting to include that snazzy new sixth-generation ATSC chipset LG just introduced. Another product that can certainly help smooth the transition, but which has been somewhat scarce, is the portable digital TV, so it's nice to see this announcement from Best Buy's Insignia label. A fraud case against SED backer Canon was dismissed, but events after 5/17 may have made that victory fairly meaningless. We close with this note - DVR maker Diego announced price cuts and storage enhancements. With the approaching roll-out of TiVo on Comcast DVRs, it's not a moment too soon.

And that's all I have at this moment. In 14 days it's time to start working on my report for the period from 5/18-6/17. As promised, I managed to be a bit less late than last time, and I'll make a similar promise right now for next time.

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