18 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 18 months until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease. This is the 17th 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). Due to my upcoming trip, this will be a bit more focused than usual. That said, here's some of what happened (or was commented on) between 7/18 and 8/17. As usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TWICE and TVPredictions.com.

THE PUBLIC - Again, nothing new this time on the public's attitude towards the overall transition, but the argument goes on over who is responsible for educating them. At the recent CTAM (Cable & Telecommunications Association for Marketing) Summit in Washington, two prominent legislators (Representatives Rick Boucher and Greg Walden) urged cable to pick up the pace of its educational efforts.

GOVERNMENT - This section's big story this comes this time from the Senate Commerce Committee, which held a hearing on July 26th, entitled "Preparing Consumers for the Digital Television Transition". The archived webcast on the linked page doesn't seem to be working (for me, anyway), but there are links to a number of transcripts from some prime players, both from the governmental side (NTIA, FCC) and from public-interest groups (AARP, National Hispanic Media Coalition and The Leadership Conference of Civil Rights). From the advocates' comments, you can see that concern is high and rising regarding the level of current awareness among their various constituencies. And comments from Sen. Claire McCaskill included this:

Frankly, this scares me, politically..I mean, there is no anger that comes close to the anger of an American who can’t get television.

For more on the overall event, here's Dale Cripp's overview.

Plenty of other people expressed similar concerns. Andrew Schwartzman of the nonprofit Media Access Project was especially skeptical of the ability for the current planned efforts to reach the poor, elderly and non-English speakers. Using a term he also used back in April '06, FCC Commissioner Jonathan Adelstein warned again of a "tsunami" of consumer complaints at The Independent Show (a conference for small cable operators). Perhaps because of all of this, the FCC is now asking for comments on proposed remedies such as requirements for broadcasters (mandatory PSAs) and cable companies (bill inserts).

Speaking of requirements, there were developments regarding several mandates. The National Telecommunications and Information Administration(NTIA) recently awarded IBM the $120 million contract to administer the converter-box program designed to allow analog TVs to still receive over-the-air broadcasts after 2/17/09. They'll be responsible for areas such as consumer education, voucher distribution and retailer reimbursement. (The program itself has a budget of $990 million, with an additional $510 million available if needed.)

You might be forgiven for thinking the story regarding another mandate (the July 1st ban on integration of security features into cable STBs) is over, considering that the July 1st deadline has passed. Not the case, as the FCC is still giving waivers for financial-hardship reasons. I can't see that being the reason if Verizon succeeds in getting the two-year extension of the one-year waiver they've already been granted. Not all waivers are being granted. though. One denial that is being appealed concerns the request from The National Cable & Telecommications Association. If it's the blanket waiver for the whole membership (meaning the biggest names) that it seems to be from reading that article, I can't find the denial surprising - granting that particular waiver would make the mandate fairly meaningless, no? For those who are complying, here's a look at the box-CableCARD combos that are now being served.

Another government-related story is the upcoming auction of the 700Mz analog-TV spectrum auction. There are two main areas of contention at the moment. One is over the rules affecting auction winners. the interesting twist here is that the open-access wireless regulations favored by FCC Chairman Martin (a Bush appointee) are being opposed by Republican House members who consider the rules an abandonment of free-market principles. There is also contention over proposals to open up the so-called "white spaces" in the DTV spectrum band for unlicensed wireless uses, proposals supported by technology companies in the White Spaces Coalition (like Microsoft, Intel, Google and others), but opposed by broadcasters and consumer electronics manufacturers such as LG Electronics, Samsung, Hitachi and Panasonic.

Finally, the FCC checked an item off the transition to-do list by issuing final digital channel assignments.

BROADCASTING - One small retransmission story this time. In a bid to counter arguments that retransmission fees impose onerous costs on cable customers. local broadcasters submitted a study to the FCC showing those fees amounted to less than a dollar per customer per month. Another recently-quiet area is stirring this month is new local HD newscasts, which have recently recorded a milestone by passing the 50 mark nationwide (still a relative handful). No progress to report on national network news, but from personal observation I can report that the one network currently offering an HD nightly newscast (NBC) is finally starting to move non-studio shots beyond the White House lawn, with some Discovery-worthy footage shown in a recent story on territorial disputes in the Arctic.

Some new (or expanded) broadcast HD to report. The CW network will broadcast all their comedies and dramas in HD this coming season, with WWE SmackDown following in January, in contrast to CBS, which will stick with SD for its reality programming. Sports coverage is picking up; the Phoenix Suns will soon be the first NBA team to broadcast all their games in HD. And ABC has launched its on-line HD player (I tried it and it looked OK, but my connection never got up to the 2mb per second needed to light up the "HD" logo).

PROGRAM PROVIDERS - As I suspect will be the case for the foreseeable future, the biggest story in this section continues to be the struggle of various providers to expand capacity, both to compete with each other and to keep up with all the new HD channels being launched in the near future. Right now, the provider to catch is DirecTV, which will be starting its 100-HD-channel push by ramping up to 70 by the end of September (with an additional 30 coming by the end of the year). The situation was recently addressed in a panel discussion at the CTAM ( Cable & Telecommunications Association for Marketing) conference in Washington. Two videos and a recap are available here.

One provider with an immediate answer to DirecTV's announcements was Echostar/Dish Network's Charlie Ergen, who downplayed DirecTV's move, using a quality-over-quantity argument ("There's not 100 channels of HD that I would watch"). Only days later, he gave a little demonstration of what he does think is worth watching, by adding six new HD channels, including four Discovery Networks simulcasts (HD versions of Discovery Channel, Animal Planet, The Science Channel and TLC) that we all assumed would go up first on DirecTV. Nice!

There were also developments in various legal issues among the providers. Providers just love doing two things these days - claiming that their HD picture quality is the best, and suing anyone who says otherwise. While Time Warner and DirecTV are settling their differences, DirecTVs issues with Comcast are ongoing. Comcast recently won an injunction against two recent commercials, and the same judge rejected DirecTVs earlier motion for a similar injunction against Comcast.

There was also some action on the franchising front. In response to the recent trend toward fast-track franchising six organizations representing local and county authorities filed suit against the FCC, challenging the agency's right to tell them how long they can spend approving new video-service providers. Also, a Connecticut judge reversed a June decision by Connecticut regulators exempting AT&T's U-verse service from cable franchising rules.

In other provider news, Comcast added over 800,000 digital customers (added to a loss of 95,000 basic subscribers, this ups Comcast's digital-subscriber percentage significantly - a crucial factor in determining how fast they can proceed with analog reclamation). Dish has a new HD DVR.Verizon FiOS is rolling out an Interactive Media Guide,that combines sophisticated DVR functionality with PC integration and widgets. They now have over 500K subs, more of whom switched from satellite than from cable. Also getting more subs is U-Verse, now up to 51K subs, which doesn't sound like much, but is way better than the 13,000 they had three months ago. Cablevision has good news, too; their HD subs are up 78 percent year-over-year.And Time Warner President Jeff Bewkes wants providers to make DVRs unnecessary by putting everything on VOD.

Smaller providers you don't hear so much are part of the picture, too. They recently came together for a conference called The Independent Show to discuss their own strategies in managing the transition.

HD NETWORKS - Another month of little new-HD-channel news - presumably the calm before the storm. There will be a new HD movie channel early next year, an HD simulcast of the Hallmark Movie Channel. Turning to channels we aren't seeing, some might be surprised to see so little news in that area from the adult-entertainment business, given its pioneering role in establishing the home video medium. This Multichannel News article looks at some of the reasons why. In existing-channels news, MOJO will have three new series this October. Finally, another bit of video from the CTAM conference, as Dan Rather talks about working at HDNet, as well as making a few comments that received somewhat more exposure in the mainstream media.

MANUFACTURERS - As happened a couple of months ago, events taking place after the 17th threaten to overshadow those of the previous month. Up until Paramount/Dreamworks announced they would join the HD-DVD exclusives club, it often seemed that Universal was the Atlas holding the HD DVD world aloft, with its extensive list of releases playing a major role in keeping the number of releases for each format roughly equal (even closer than last time, in fact). That's probably why we started seeing indications that Universal might be coming under pressure (despite their denials.) to add Blu-ray support. To the mainstream consumer, lack of Universal product was (up to that point) the only price they would have to pay for picking Blu-ray. Those concerned about missing out on anime from Bandai or the 1000 indie films project that I mentioned last time are a much smaller group, so any Universal switch would have to be seen as more of a game-ender than a mere game-changer. With these new reinforcements, that's a lot less likely to happen in the near future.

However, the continuing problems for HD DVD extend beyond studio support. Target recently decided to start putting NextGen players in its stores - but only Blu-ray models. Like Blockbuster, this decision affects stores, not the website, and HD DVD discs (along with the Xbox 360 add-on drive) will remain in the stores. Also dropping HD DVD from stores is BJ's Wholesale Club. But now the question arises - when customers want to know why they can't get Shrek 3 in HD, will Target, Blockbuster and BJ's change their tune? I expect to see more fallout from this development in the next recap.

In hardware news not related to NextGen DVD, TiVo has introduced the sub-$300 "lite" version of the Series 3 that I said they were working on last time, and (getting back to the transition), Samsung will be selling a $75 Digital converter soon ($35 after using one of those $40 government coupons).

And that's all for this monthly recap. I am off to Japan on Wednesday, August 29, and expect to start work on the next recap on September 13. There'll be a lot of news, and it will likely be a bit later than normal if you're a new reader, I should explain that this one is several days earlier than normal). See you then!

My Upcoming Trip and How It Affects This Blog

I am currently in full gear-up mode (and somewhat behind on my schedule) for a two-week trip to Japan in a few weeks (from 8/29 to 9/12). This means I have a lot less time for this blog right now, so expect "18 Months and Counting" (covering events from 7/18 to 8/17) to be more selective and less inclined to wander from the main themes than usual (I'll still mention the major events in the NextGen DVD war, but really peripheral topics like content regulation will be skipped). It will go up no later than the 28th, hopefully sooner.

September looks to be a huge month for HD channel launches, so I can't very well skimp on that. Since I won't be able to start gathering links until 9/13, it's more likely that "17 Months and Counting" will be later than usual. After that, I plan to be back on schedule. Unfortunately, I'll be too taken up with gardens and castles and shrines and the like to learn much (if anything) about the Japanese DTV/HD scene, but if I do stumble across something, I'll let you know!

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.