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HDTV—Not a Pretty Picture

Does anyone even remember what HDTV stands for? It's high-definition television. And we have been hearing and reading about it for almost 20 years.

The earliest piece of HDTV hype came from, of all places, a widely reported 1987 Federal Communications Commission advisory committee study that described HDTV as "an economic opportunity of almost unparalleled proportions." Anyone who had actually seen HDTV at the time probably would have agreed. Even then, the picture was startlingly clear, as good as any large-print color photo. Press reports were glowing, referring to "quality that dazzles."

But HDTV has faced one technological and political hurdle after another, mainly from broadcasters (both local stations and the networks) and local and cable TV operators who don't want to spend the money to upgrade their systems. It has also been hard to convince consumers that they really need a TV set with improved picture quality that's going to cost several thousand dollars.

HDTV took one of its first widely publicized hits in 1996 in The Unpredictable Certainty—Information Infrastructure Through 2000, published by the Computer Science and Telecommunications Board of the National Science Foundation's National Research Council. In a chapter titled "Making Technologies Work," members of the National Information Infrastructure 2000 Steering Committee—made up mostly of research executives of leading technology companies and university professors—said they "generally discounted the impact of HDTV as a force shaping communications and information-related behavior and markets for the next 5 to 7 years, given HDTV's high initial prices and very limited sales." The authors also expressed the belief that "it will be even longer before a significant amount of HDTV-compatible programming will be available." The committee considered the availability of new spectrum for other uses to be more important than a higher-fidelity television viewing experience. "TV programming displays on PCs are growing," the committee wrote, "presenting prospects for enhancing and otherwise using those images."

The industry sold 625,000 HDTV-ready receivers to dealers in 2000, a fivefold increase over 1999. But when you add it all up, less than 3% of all TV sales in the United States reported by the Consumer Electronics Association are digital. And those numbers represent sales to dealers, not consumers. The real number is closer to 425,000.

It has been a tough pitch. In 1993, after more than 10 years of well-financed research and development by several organizations in the United States, Japan, and Europe, a "Grand Alliance" was formed by three groups that were competing to develop a technical standard for an American HDTV system. (Japan got a big jump on the rest of the world with its HDTV system, but it's analog based, and it is not selling as hoped.) Taking a "best of the best" approach, Grand Alliance members selected what they thought were the strongest elements of each of their systems and came to an agreement on an advanced TV standard.

In 1995, the FCC's Advanced Television Standard Committee (ATSC) endorsed the alliance's proposal for 18 different standards from which broadcasters could chose. Broadcasters would then have to acquire the equipment needed to transmit in an HDTV format. Special programming would have to be developed and produced. TV manufacturers would then have to build the sets with circuitry capable of handling all of the different formats.

In 1997, the FCC set aside the spectrum needed for digital broadcasting. It established a nine-year transition period for U.S. consumers to completely switch over from their current analog sets to digital television (DTV) or to add digital-to-analog converters to their old sets. During this time, broadcasters were to begin transmitting digital as well as their usual analog TV signals, using a second channel allocated for DTV. In 2006, according to FCC rules, or until digital broadcasts reach 85% of U.S. households, whichever comes later, analog broadcasts will cease and broadcasters will give up their old analog frequencies to the FCC to be used for other services. (Note: It took more than 20 years for color TV and 16 years for VCRs to reach that level of market penetration. Color TV was introduced in the mid-1950s and didn't start to outsell black-and-white TV sets until the mid-1970s. And color probably wouldn't have grown that fast if David Sarnoff, who ran RCA at the time, had not personally ordered NBC, then owned by RCA, to broadcast all of its prime time programs in color.)

It is unlikely that the FCC deadline will be met because broadcasters are dragging their feet and Congress is unlikely to force the issue. Broadcasters donated millions of dollars to members of Congress between 1987 and 1996 and lobbied the Telecommunications Act of 1996 heavily enough to win free licenses for new spectra valued by industry analysts at $70 billion.

Gary Chapman, president and CEO of LIN Television Corp. and chairman of the board of the National Association of Broadcasters, put his best spin on his industry before the House Telecommunications Subcommittee when he said that broadcasters are developing and implementing various DTV services "in keeping with the flexibility Congress complemented in the '96 Act." In fact, most broadcasters are in no hurry to offer HDTV. At the end of 2000, only 173 out of a total of 1,288 TV stations were broadcasting in a digital format in the United States. When they finally upgrade, many of them will use their new digital channels for an entirely new revenue stream—providing commercial data services in competition with others who currently do the same thing. What some broadcasters called "leftover bandwidth" until they figured out they could make more money with it (they now call it "enhanced television") will enable them to transmit commercial data over the air, including Web content, stock reports, and printable electronic coupons. In more technical terms, each 6 megahertz DTV channel can transport data at 19.39 megabits per second, which is 346 times faster than a 56K modem. This can be used for television, non-TV data, or a combination of both.

Television set manufacturers have more than held up their end. They have introduced about 200 different digital TV-related products, including DTV and HDTV monitors, integrated sets, and stand-alone set-top boxes. With broadcasts moving slowly and little programming available, TV manufacturers now appear to be in no hurry to produce HDTV, or HDTV-ready, models. Gary Shapiro, president of the Consumer Electronics Association, asked his members in Vision, the association's magazine, to "keep the pressure on local broadcasters, and reward those—maybe even with your HDTV ads—that are helping, rather than hurting, our momentum."

They're not having much luck. Most DTV manufacturers' sales have been DTV and HDTV displays that require the addition of a set-top box to receive digital broadcasts. In 1999, 17% of the total DTV products sold (including monitors, integrated sets, and digital set-top receivers) were capable of receiving digital broadcasts. This trend will likely continue if some broadcasters continue to challenge the DTV broadcast standard or insist on using DTV primarily as a subscription service.

With prices ranging from $2,500 to $6,000, most industry analysts believe that it is unlikely that one million HDTV sets will be shipped before 2003. A point of reference: About 130 million color TV sets are manufactured in the world every year. It comes down to the chicken-and-egg thing. Broadcasters say they don't want to build-out their digital system until programmers develop more material in a digital format, and TV manufacturers don't want to crank up their digital set production until more TV stations begin broadcasting digital signals. Consumer confusion about the terminology (DTV, HDTV, standard definition television, and SDTV) doesn't help.

If the programming transition continues at its current pace, the Consumer Electronics Association expects DTV penetration to slow. To meet its moderate projection of 30% market penetration by 2006, broadcasters will have to step-up the pace and provide more substantial HDTV programming. With an accelerated commitment from broadcasters, the CEA believes that it can reach or exceed 50% penetration by 2006.

In February 2002, the National Association of Broadcasters and Consumer Electronics Association began a campaign to promote HDTV, using a series of specially developed commercials and "watch parties" in three cities—Houston, Indianapolis, and Portland, Oregon—with network-affiliated TV stations already broadcasting digital TV signals.

The question for consumers now is, how much better is HDTV reception than their current TV reception? Is it more than $2,000 better? If not, when will broadcasters, programmers, TV manufacturers, and regulators get it together and make HDTV a true mass market reality? How long will it take for the price of these sets to drop to a much more comfortable $500?

Stay tuned.

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