Thursday, August 02, 2007

19 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 19 months until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease. This is the 16th 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 6/18 and 7/17. As usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TWICE and TVPredictions.com.

THE PUBLIC - Nothing new this time on the public's attitude towards the overall transition, but as usual we've got arguments over who is responsible for educating them. There are a couple of studies relating to the spread of HD. One from the Consumer Electronics Association finds HDTVs in 30 percent of U.S. households, with the percentage of HD owners getting HD service still under the 50% mark (at 44%). Remember, though, that that's 44% of a rapidly expanding number. According to this other study conducted by the Cable & Telecommunication Association, 70% of prospective HD owners know they have to get an HD programming package or antenna to get actual HD programming; putting the two figures together seems to suggest that a significant percentage of the holdouts are not so much unaware as simply uninterested.

GOVERNMENT - As mentioned above, there's an argument going on over responsibility for informing the citizenry of the mandated analog shut-off. FCC Chairman Kevin Martin recently responded to congressional criticism of the FCC's performance, in the process pointing out the the FCC has yet to receive the the $1.5 million it has asked for to help publicize the changes.

Meanwhile, there are other mandates, and one just went into effect. As of July 1st, the FCC has banned the deployment of cable set-top boxes with integrated security features. Security will now be provided by CableCards which can be plugged into either the cable company's leased equipment or third-party equipment owned by the consumer, a prospect that puts the CEA in a celebratory mood. But the FCC has given providers an out, one designed to speed the digital transition - if a provider has (or promises to have by 2/17/09) an all-digital network, they get a waiver. Over 120 companies have received them, including Verizon (thanks to a last-minute promise). The other telco service in the video market (AT&T's U-Verse) is maintaining that their IP technology is not covered by the ban (therefore, no need for a waiver). Meanwhile, the American Cable Association (a group representing small cable operators) is maintaining that the whole thing stinks.

We're now starting to see stories relating to one of the critical next steps in the transition, the government auction of the existing analog spectrum in the 700-Mz band, which is scheduled to begin no later than 01/28/08. Various groups have been promoting their ideas on how this auction should be managed. Public-interest groups would like to see cable companies and telcos kept out of the auction, in order to provide a boost to new players in the high-speed Internet access market. Then there's Frontline Wireless's plan to build a free nationwide first-responder network, if in return they can supplement the 10Mz they plan to win in the auction with 12Mz of the 24Mz mandated for public safety (only when there's no actual emergency going on, naturally). This plan would be implemented through proposed auction rules which would heavily favor Frontline in the bidding for that 10Mz (known as the E Block), rules that are somewhat controversial. Some of those rules (such as network neutrality) are also part of a proposal endorsed by FCC Chairman Kevin Martin, seemingly marking a change in the Chairman's thinking.

Finally, a note about a different digital transition than the one I've been covering - the FCC has upheld a plan to allow cellular carriers to turn off analog cellular service on 2/18/08 (a year before the same thing happens with TV).

BROADCASTING - Very little of note in this category this time. As an example, I have no retransmission stories at all. Also, no announcements of local news operations going HD (as I said before, I doubt this has stopped happening, but perhaps it's not considered as newsworthy as it once was). While we're waiting for more news in this area, here's a story of how local stations are using lighting to lessen the effect of HD on their on-air talent.

One sign of progress is when it's more noticeable that a program is not in HD then when it is - here's an article on how NBC and ESPN failed to deliver the goods in regards to this year's Wimbledon tournament. Contrast this with the treatment of the recent Live Earth concerts.

Something I learned this month - Americans don't have a monopoly on worries over their HD picture quality - Australians like to complain about that as well..

PROGRAM PROVIDERS - A lot more activity here, as you might have guessed. The long-promised launch of the DirecTV 10 satellite finally happened, clearing the way for DirecTV to start implementing their 100-HD-channels plan sometime in September (additional capacity will come on line sometime after DirecTV 11's scheduled December launch). So what are their competitors doing about this? Echostar's Dish Network (which will have their own new satellites going up next year) somehow found room to add 15 more channels in August and September (they're the second provider to announce carriage for those new channels from Discovery). Cablevision finally got around to adding those VOOM channels they own, and claim that their fiber-optic network will soon have 500 channel capacity (although they didn't say just how). More conservative in their ambitions is Cox, who are aiming for 50-channel capacity this year, and 100 by the end of 2009. Perhaps this conservativism has something to do with their determination to put picture quality first.

Switched Digital Video is one of the most highly-touted bandwidth-extending technologies, and Time Warner recently shared their experiences (they've been rolling the technology out in the Austin area, and hope to have it in at least half their markets this year) at this year's Cable Tec Expo. Meanwhile, Comcast used a bit of the bandwidth it gained with its recently-completed Chicago analog reclamation project to play catch up by adding four HD channels (A&E, Food, HGTV and National Geographic) already seen in some of their other regions. So what will they do with all that other space? Put another way, how many other areas have to go through a similar reclamation before it will be worth their while to sign up some of those new channels that will soon start dropping from the heavens?

Whatever it is other providers choose to do, they have to do something, as those unable to make the necessary investments may well get swallowed up by those who can.

No updates on this time on the various legal matters I've been following (Time Warner's suit over DirecTVs claims of superior picture quality and channel capacity, DirecTV's suit against Comcast over consumer preferences and Cablevision's defense against charges of copyright violations regarding their "network DVR"). The statewide-franchising front was fairly quiet as well, with Illinois' bill being signed into law, but also with increasing resistance from localities in various states (one argument being that a lack of build-out mandates will allow providers to cherry-pick communities and leave poorer ones out in the cold).

In news specific to individual providers, DirecTV offered a sneak peak of MHD (including the six-hour Concert For Diana), which will be added to its lineup in September. Comcast signed off on the software for its planned August rollout of TiVo service in parts of New England. AT&T is adding HD to its Homezone service. The most news comes from Verizon, which is nearing the half-million mark in FiOS TV subs, adding Rhode Island to its list of states and will be launching HD VOD in the future (they don't have it already?), as Cox has just done.

HD NETWORKS - Like last time, I'm not seeing nearly as much new-channel news as I would have expected, given how many channels are expected to debut in the next few months. TBS did set a firm date (September 1st) for the TBS HD launch. There are a couple of other networks that hope to be seen by many of you soon. The yet-to-launch Big Ten network (which will have an HD component from the start) is struggling for carriage on Comcast, and newcomer MavTV (a "male-oriented" network) is preparing an HD launch for early 2008, (where it will presumably vie with MOJO for that demographic). Nine new channels not as likely to be seen by a broad audience were launched by Houston-area provider Optical Entertainment Network. All feature "relaxing" images and ambient music (and you thought VOOM was narrowly-targeted). And one of the first actual HD programs to appear on CNN HD will be the documentary Planet In Peril, which will air in October.

Not new networks, but here's a couple of tantalizing hints of possible HD entrants in the future. AMC's new series Mad Men was filmed in HD and is now available on Comcast HD VOD, while Sundance Channel (near the top of my HD wishlist) is presenting a weekly programming block on Universal HD.

Among existing channels, HDNet continues to get coverage, this time by topping what's described as "the first high-definition TV ratings" (gathered by TNS Media Research). HDNet's Mark Cuban also has more thoughts on HD, this time focusing on whether there is programming that is good only in HD. There was also some news related to National Geographic HD - they are being added by Cox and recently announced a bunch of new specials.

MANUFACTURERS - As usual, we'll begin this section with a look at the state of the NextGen format wars, and this time we begin right where we left off last time, with Blockbuster's big decision to focus solely on Blu-ray as it expands its pilot NextGen operation from 250 stores to 1,700, meaning that the additional 1,450 stores will be Blu-ray only. How big a deal is this, really? Will the message this gives to millions of consumers (the ones that still like to browse their rental DVD choices in stores, anyway) just checking out these formats (mainly that they'd better get on the winning team) help bring the war to an early end? No surprise that Blu-ray backer Panasonic thinks it's over. Maybe, but not everyone is ready to throw in the towel just yet.

Most vocal among that group of HD DVD believers is, as you might expect, the HD DVD Promotional Group , which recently claimed to have an overwhelming European lead in players sold. However, that lead disappears once you add in PS3s and PC Drives. The HD DVD folks counter with the argument that console sales mean little since a smaller percentage of them are used for games, but if you look at the huge edge Blu-ray has in disc sales, I'd have to guess that PS3 owners account for a fair share of that. Lack of PS3 figures may also affect their other claim, that Blu-ray sales are down in Q2 (as compared to healthy growth for HD DVD). However, the PS3 factor can't explain away the claimed 5% decline in Blu-ray disc sales, so that's interesting.

Plenty of others are still on board as well. Microsoft (who already have a HD DVD add-on drive for the XboX 360) most certainly is, so much so that they claim that their HDi interactive technology will be a difference maker in the struggle. They are also helping on the content side, partnering with Amazon and CustomFlix to get up to 1000 indie films on HD DVD. Warners is also a valuable team member, treating the formats equally with planned "best of" box sets for each, then going a bit beyond that by providing expanded extras on the HD DVD of 300 (for $5 more than the Blu-ray version). Warners would be even more valuable if their "Total HD" double-format disc (which could tempt consumers to jump in, knowing that if they back the wrong horse they'll just have to replace the player, not their library as well) wasn't delayed until 2008. Another way to future-proof yourself is to invest in a dual-format player, and the one coming from Samsung in the late fall will (unlike LG's player) support all the features of both formats (UPDATE: the first version of this post mentioned a much lower projected price - less than $600 - as reported in the linked article. This appears not to be the case, as the price announced on 7/25 is actually $1049) . And we can't forget Universal - the only major studio backing HD DVD exclusively has done a heroic job cranking out the back catalog and thus keeping the number of titles available in each format roughly even.

We should also point out that Blockbuster's experience is not universal. Netflix is seeing more balanced demand (scroll down to the end of this TVWeek article, and according to this Video Business piece (thanks to Engadget HD for bringing this to our attention) retailers are still planning to stock both (although Hastings Entertainment is thinking of going Blu-ray exclusive, and the Virgin store in Times Square devotes twice as much space to Blu-ray as HD DVD). It also is looking as though the giant audio/video club Columbia House will support both formats come the fall.

Still, HD DVD has a pretty high mountain to climb, and it's getting higher. When you add stand-alone players to things like game consoles and attachment drives, you get a 5 to 1 edge in Blu-ray's favor as far as installed base goes. And you can add one new content source (GalleryPlayer) to the ranks of Blu-ray exclusives. There's sure to be plenty of new developments next time!

Moving on to retail, the continuing ripples of last year's holiday-season blowouts have pushed Tweeter into Chapter 11, and now their stock has been de-listed. They have, however, gotten a "going concern" offer for almost all of their assets, indicating that the brand is likely to live on under new ownership. Circuit City is also making changes by de-emphasizing TV.

There's just a few other pieces of hardware news that caught my eye this time. ATSC (the Advanced Television Systems Committee, whose initials are usually seen in connection with digital tuners) is evaluating proposals for a mobile/handheld ATSC standard (to be called ATSC-M/H). If you're interested in Mitsubishi's new laser TV display technology, the company will be showing it off at January's CES. Finally, TiVo is working on a 'lite" version of the Series 3 for $299 (UPDATE: They're already taking orders).

And that's all I have at this moment. I slipped back a couple of days on the schedule due to an upcoming event, which will also affect the next monthly recap, and even the one after that (though not as much). Look for a post with more details on this in the next few days.

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