Sunday, December 30, 2007

14 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 14 months until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease. This is the 21st of 35 planned monthly recaps of developments affecting the various players (laid out in my first few posts) in this story, meaning that we have gone well over half the distance that remained when we started this blog in March of 2006. 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). That said, here's some of what happened (or was commented on) between 11/18 and 12/17 (with a couple of exceptions - see the GOVERNMENT and MANUFACTURERS sections below). As is usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TWICE and TVPredictions.com.

THE PUBLIC - With The Day coming closer, we are starting to see an uptick of surveys measuring public awareness of the transistion. The surveyor this time out was the Cable & Telecommunications Association for Marketing (CTAM), and the news was mixed - things are still bad (just under half of U.S. households are aware of the transition), but getting better (that figure was 29 percent in July 2005). The other major finding was that households that rely on over-the-air broadcasting are least aware of the transition (at 31%). Of course, these are also the people most likely to be affected by it. Let's hope those DTV Action spots that have been airing since around the time of the SuperBowl have some effect. Likewise with the campaign launched by Univision, the top Spanish-language broadcaster.

In the related area of HD awareness/usage, things are also getting better - a research study from Frank N. Magid Associates reveals that the 20% of U.S. households that have a HDTV are broken down between the 14% that get HD programming and the 6% that don't. Magid's Maryann Baldwin sat down with Broadcast Engineering to discuss the findings.

GOVERNMENT - Two important transition-related events are on the horizon, the January auction of the current analog TV spectrum (62 Mz in the 700-Mz band) and the beginning of the federal program to issue $40 coupons good towards the purchase of DTV converter boxes for the huge installed base of analog TVs. We've recently learned some information relating to who is in and out in this area - Google will bid and so will Cox, while Comcast will not and neither will Time Warner. Hmmm. I, for one, would be interested in seeing what Google would do with that spectrum.

January also brings us the start of the converter box program run by the National Telecommunications and Information Administration (NTIA), with the coupon-request process beginning January 1st. The NTIA will start mailing those coupons on February 17th, giving early-requesters a one-year head start (laggards needn't worry, as the program runs through March 31, 2009). In the meantime, NTIA has been busy certifying boxes, which will be carried by a slew of retailers.

Previously-covered stories continued to play out. House Energy and Commerce Committee Chairman John Dingell issued another warning concerning what he considers to be insufficient government transition planning (and if you're thinking "this guy sounds like a broken record", go back to the beginning of this section and look at those awareness figures again). The FCC's failure to exempt small mom-and-pop (bandwidth-strapped, small customer base) cable operators from the recent "dual carriage" mandate to carry an analog version of digital "must carry" channels for three years after the transition came in for criticism from seven U.S. senators. And a similar failure to exempt small operators from the FCC mandate relating to set-top boxes came in for criticism from within, as FCC Commissioner Jonathan Adelstein called out Chairman Martin for giving giant telcos like Verizon a pass on the same issue.

But the most-covered issues (by far) between the government and cable operators weren't even connected to the transition at all - I'll mention them here because the state of those relationships play an ongoing role in the overall story. The basic theme concerns FCC Chairman Kevin Martin's ongoing war with the cable industry, carried out by whatever means necessary. He continued his efforts (noted in this section last time) to use provisions of a 1984 law that allows for dramatically greater regulatory control of the cable industry if it meets the "70/70" test (both available to and seen by 70% of TV households). This drew opposition not only from the usual industry suspects but also Congress and, once again, one of his own commissioners. This time it was FCC Commissioner Robert M. McDowell, questioning the methods by which the supposed 70% had been derived (as did Wall St. analyst Kevin Moffett). Opposition from Congress came from four Senate Republicans concerned with the depth of re-regulation being proposed. More specifically, Sen. Arlen Specter (R - Pa.) attacked proposed compulsory arbitration rules that seemed designed to force the NFL Network and the Hallmark Channel onto the lineups of Comcast and Time Warner. Eventually Martin had to back down on these ideas, but there were other congressional complaints as well - House Judiciary Chairman John Conyers (D-Mich.) questioned Martin's continuing support for a la carte, and Sen. Claire McCaskill (D-Mo.) attacked Martin's hiding of data from his own colleagues in order to advance his agenda. These same tactics were later brought up by Sen. Dingell as one of the reasons for launching a congressional inquiry looking into Martin's management of the agency.

But Chairman Martin wasn't done yet. Next up was his plan to impose an ownership cap aimed at preventing any one cable company from having a national market share of more than 30% - this time, despite the expected protests from Comcast (the company most affected) he got what he wanted. Similarly approved (despite even more congressional protests) were other ownership changes allowing local-market consolidation (i.e. newscasters and broadcasters in a particular market can now buy each other), just in case anyone thought that some of his other recent positions were taken in the name of public interest and "the little guy". (Both of these victories came on Dec. 18th, a day after our usual close.)

What, then, is Martin really trying to accomplish with this war on cable? From everything I've read (and as this article makes reference to), it seems to be fundamentally about a la carte - it's an issue of particular importance to the religious broadcasters that he sees as a natural ally in the campaign to "clean up" TV - until cable gives in on that, expect to see him continue to do his best to punish cable (indirectly) for its programming sins.

BROADCASTING - The news this time is once again largely about the news (HD news, that is). As usual, there were a couple of additions to the 60-some count of local stations with HD newscasts. But the big news was on the national level, with the Dec. 17th HD launch of The NewsHour with Jim Lehrer. Although pbs.org didn't consider the news worthy of their front page, the NewsHour sub-site had a lot of good info, including this transcript of the piece on the subject, the last story of the last show of the NewsHour SD era.

Which is why it's a real shame that a lot of PBS HD watchers (myself included) can't see it in HD. I guess most of us assumed that when this happened it would naturally go up on the the national PBS HD Channel feed, but that's not the case. As this article shows (the comments section especially), NewsHour feeds go to a different (DT3A) feed than the PBS HD Channel (DT2A) feed, with local stations given the option to override the latter with the former. This is something that the great majority of stations running that channel are unwilling or unable to do at this time. Ironically, those stations that dropped the PBS HD Channel back in July when the fee to stations went up (a story I missed at the time) are much more likely to be running the NewsHour in HD via the digital simulcast of their analog PBS station - stations running the PBS HD Channel tend to run the simulcast in straight upconvert (no HD or WS) mode. This is the case here in Boston, where no viewer (either OTA or Comcast) of WGBH (one of PBS's flagship stations) is able to see the NewsHour as the show's producers intend it to be seen. More detail on this can be found from my posts from Dec 16th (I spent that weekend checking the schedules of 50 PBS stations across the country) and earlier today (surveying the aftermath). Judging from what I can see on the windowboxed analog feed, it looks pretty good (more widescreen location shooting than NBC's nightly news) - hopefully I and many others will get to see it before too long.

Last time, I made note of the extremely slow progress of syndicated HD. Some of the reasons for that are technical. Thanks to Engadget HD for pointing me to this enlightening Broadcasting & Cable article.

PROGRAM PROVIDERS - Once again, the major theme here is "catching up" - everyone's trying to catch up with DirecTV's recent explosion of HD channels (which has slowed down quite a bit lately, although they did add BIO HD (a Biography Channel simulcast). While there's too many to mention individually, there are a few of special note. The most notable of the notable was Charter, which used a plant rebuild in Louisiana (made necessary by Katrina and Rita) to adopt Switched Digital Video and double their HD channel count to a hefty (for cable) 44. Next year, Charter plans to use SDV and other technologies to do a similar doubling across its various markets. Also using SDV is Cox, which added 11 channels to its Northern Virginia lineup, the same number Comcast recently added to its Twin Cities stable (I don't have the details on how Comcast did it). Others adding fistfuls of channels to various systems include U-Verse (adding eight to its nationwide lineup) and Insight (six new channels, available throughout its Midwestern service area). Also adding content was Verizon FiOS, which launched its HD VOD service.

Today's adds are only part of the story, equally important are plans for the future. Besides the SDV technology mentioned above, Cox is bringing all their systems up to the 1Gz bandwidth mark. Comcast Media Center has figured out a way to stuff three HD channels into one 6Mz QAM channel, supposedly without sacrificing quality. Time Warner's CEO is promising "unlimited" HD programming (presumably involving the use of SDV). Bright House Networks in Florida plans to add 50 HD channels in the next 18 months, citing their "hybrid fiber-coaxial network architecture". With all SDV rollouts gearing up, TiVo owners have been worrying about the future compatibility between their favored DVR and their local provider, making this new device (developed by TiVo, CableLabs and cable operators) an especially welcome announcement.

On the legal front, old suits were settled and new ones begun. HDNet settled their suit with DirecTV over the placement of their channels - HDNet itself will continue to be available to all HD customers, while HDNet Movies will require DirecTV's $4.99 "HD Extra Pack". As a result, HDNet dropped a request to the FCC to impose conditions on Liberty Media's buyout of News Corp's share of DirecTV. DirecTV and Cox settled their suit over Cox's "HD looks better than cable" claim on its website - that claim has now been removed. But I'll still have something to write about in this section, as Comcast initiated two new actions. One was against the FCC over recent FCC rules forcing cable operators to offer their satellite-delivered networks (such as Comcast's Golf Channel) to non-cable competitors (e.g. DirecTV, Dish, FiOS, U-Verse) until 2012. The other was against the NFL, for trying to drive business to other providers despite having an NFL Network carriage agreement (though obviously not the one NFL would like to have) with Comcast. In response, the NFL has announced that it will pursue legal action in a retransmission-consent matter concerning Comcast's broadcast of a recent game outside the DMA it was contracted for.

Not much franchising news this time - local regulators are appealing the latest FCC order concerning the "90-day shot clock" (fast-track treatment given to telcos requiring that local government act on applications within 90 days).

Let's move on to news specific to individual providers. DirecTV picked up some interesting technology with its purchase of the assets of DVR pioneer Replay TV, their customers will have to sign up again for the separate "HD Extra" pack containing most of DirecTV's non-simulcast HD channels (but they're getting three months free in the process) and Liberty Media (due to assume ownership soon) plans no changes in their focus on video and HD in particular (as opposed to "triple play" services). Comcast has set a $2.95-per-box price on its TiVo service (and started to roll it out after our close - more info next time!). The stock of Echostar (Dish Network) recently went up based on speculation of an AT&T buyout, though that speculation seems to have cooled lately. And that last sentence may be the last time "Echostar" appears in this blog, since the company has now officially renamed itself Dish Network. Verizon's FiOS service added a new state (Oregon), and is giving away free (albeit small) HDTVs to new triple-play subscribers. AT&T's U-Verse service also expanded (into the St. Louis, Miss. area, with a trial run scheduled for Atlanta, Ga.), and was busy in other ways - rolling out interactive features in Detroit and Los Angeles, predicting growth to the one-million-customer level next year (with availability to 30 million homes by 2010) and preparing an ad campaign based around its carriage of the NFL Network. Cablevision launched a promotion focusing every day on a different channel (out of their 44-channel HD layout). And the video-download service VUDU is now offering HD movies.

HD NETWORKS - As I said in PROGRAM PROVIDERS above, too many providers have been adding too many channels to list individually. But from what I've read, some things are clear. It appears that three of the new suite of HD channels from Discovery Networks (Discovery, Animal Planet, TLC and Science Channel) were the most-added channels during the last month Science Channel did less well than the others, which is surprising - you'd think it would be better-received by HD watchers than TLC, although it does seem nowadays that operators are more interested in getting the biggest brand names from the SD world than channels that show off HD to best effect. Others making significant progress include USA, History, National Geographic, Food Network, CNN, HGTV and TBS (why?), with SciFi just beginning to get traction.

Surprisingly, I have only two channel launches to report this time - both overseas! BBC HD is an "omnibus" channel (like PBS HD, HD Theater and MHD) that will combine HD program from all the BBC channels, while Disney Cinemagic HD (launched in France) is positioned as a family movie channel.

Announcements of future HD channels are on the light side as well this time. January will bring two new simulcasts (not yet named) from the Discovery Networks family. Hallmark Movie Channel HD will launch in March. College-oriented ESPNU will follow in August. Finally, Lifetime will launch their HD service sometime in '08. If you're thinking this slowdown is permanent, check out this extensive look at the cable HD scene (including a prediction of 63 new channel launches in the next nine months).

As noted above, simulcasts appear to be bulk of new channel launches now, and that brings the problem of non-HD footage, which is often stretched or otherwise made to look worse than the regular SD broadcast (not the best advertisement for HD). This article examines the situation, while this one points out that things are improving in the area of original HD production. Hopefully, at least a few of these new channels will be designed to showcase HD's advantages.

MANUFACTURERS - Last month we reported on a pretty good month for HD DVD In the NextGen DVD format war. And additional good news was soon forthcoming, with reports that HD DVD player sales (when counting the XBox 360 add-on) had passed 750,000. Even though the Blu-ray camp quickly countered that including PS3s raised their player count to 2.7 million (ignoring the fact that the only reason to buy the XBox add-on was to play discs, not so with the PS3), this was still a big step forward. (HD DVD captured 62% of standalone HD player sales during Thanksgiving week).

The rest of the month was a bit less encouraging , as a key element of the HD DVD case began to show signs of weakness, while key elements of Blu-ray's case got even stronger. Since the beginning, HD DVD has been the value leader, reaching an extreme level with the recent Toshiba HD-A2 $99 blowout and $200 special on the HD-A3. But those specials came to an end and the price drops started coming on the Blu-ray side, culminating with a Dec 11 price of $269 for Samsung's BDP-1400 player. For a brief time (that player is now back over $300 and the HD-A3 has reached a new low of $178.98 on Amazon) the platforms were roughly equal on that front (unless you wanted to go to Wal-Mart and pick up a $200 Venturer HD DVD player from China). So while those big HD DVD blowouts probably had an influence on recent survey results showing that people intending to buy their first HDTVs in the next six months are more interested in HD DVD than Blu-ray, the loyalty of that audience can't be assumed if prices of the two formats continue to grow closer.

At the same time, where Blu-ray was strong it seemed to be getting stronger. Where disc sales had been running 2:1 in favor of Blu-ray (except on weeks where a big HD DVD exclusive release like Transformers might temporarily even the scales), we've been starting to see weeks lately where the Blu-ray advantage is more like 3:1. These numbers change week to week and the very latest I've seen are back in the historical range, but this bears close watching. And the superior studio backing finally shows signs of producing a sustainable lead in number of releases available.

Still, the only thing that could realistically bring this game close to a conclusion would be a major studio defection from the HD DVD camp - which is probably why the Warners story won't die. Seeing as how the rumors arose from actual statements from actual Warner exec Dan Silverman (followed later by comments from Lionsgate's Michael Burns), I'm not as surprised as some that the rumors have survived this Warner denial followed a month later by another Warner denial - we've all seen denials that actually translated as "we're not ready to tell you about that just yet". More comforting is the fact that Warner is scheduled to attend an HD DVD promotional event at CES (Jan 7-10), so CES should definitely provide a bit more clarity (in more ways than just this). Speaking as a new HD-A3 owner, I can only hope that the recent growth in the number of installed players makes for a profitable business on both sides of the isle - and that combo players will one day carry mass market prices.

Two other notes before we turn to other hardware news. If things were really as bad for HD DVD as some think, you'd expect a little more enthusiasm from Sony CEO Howard Stringer, wouldn't you? Which makes me wonder why he can't seem to make up his mind as to whether his format is actually winning or not. Who knows, perhaps he just doesn't want to be seen as arrogant. And I just had to pass on this bit concerning Michael Bay's Microsoft conspiracy theory - draw your own conclusions.

Moving on - almost done! Following up on last month's OLED story, the 11-inch Sony set I mentioned last time may be trumped at CES by a 31-incher from Samsung. Sony has less to worry about from Toshiba, whose own 30-incher has been shelved.(until at least 2010). Also delayed is the launch of the reputed "plasma killer" laser TV platform, though back in June Mitsubishi promised some sort of announcement at CES, so we'll see if that still comes off. Another follow-up from last time - another company (Seiko) has ceased producing and selling rear-projection (RPTV) sets, even as the platform had an up month in sales. We close with a look ahead to future post-HD technologies (eight times current HD resolution) from Samsung.

And that's all I have for now! By the time the next recap comes around, CES will be in the books - expect lots of developments there.

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