Analog is Dead. Long Live Analog2/15/2008 7:00 PM Eastern
Is analog TV an albatross for cable?
Or — with just 365 days to go until over-the-air broadcasts from local stations go wholly digital — is it a critical near-term asset?
The short answer: It’s both.
Analog service, which has formed the foundation of the cable-TV industry since its inception, chews up an inordinate amount of space on its wires. A single analog channel requires a 6 Megahertz slice of spectrum. The same slice can carry 10 or more standard-definition channels delivered digitally.
And the future, in an increasingly high-definition world, is all-digital. “You can’t get anything but a digital TV set these days … and analog doesn’t look very good on a 50-inch LCD TV,” RCN vice president of engineering Rick Swiderski said.
In fact, cable operators are moving to eliminate fat analog signals to “reclaim” bandwidth, so they can introduce new high-definition channels, offer faster Internet access and expand video-on-demand services.
The industry would seem to have the motivation to make the break, exactly one year from now. At midnight on Feb. 17, 2009, the 1,760 full-power broadcast television stations in the United States are going all-digital.
By law, they will be required to relinquish the spectrum they’ve used for decades to transmit analog TV signals over the air. Starting at 12:01 a.m. on Feb. 18, all stations must be all-digital, all the time.
But just a handful of smaller cable systems, such as RCN Chicago and Bend Broadband in Bend, Ore., plan to be delivering 100% of the channels they supply customers in digital form by next February. And their reasons for doing so are only indirectly related to the transition to digital broadcasting by TV stations.
|Digital Video Subs||Analog-Only Video Subs||Digital Penetration||Year Prior|
|* As of Dec. 31, 2007 ** As of Sept. 30, 2007
SOURCES: Company reports
|Time Warner Cable*||8.0M||5.2M||61%||54%|
WINDS OF CHANGE
In the Windy City, RCN mainly wanted to expand its services. The overbuilder had 85 analog channels, which are also offered in digital format. In the space left by clearing out the analog versions of those 85 channels, the company added 20 new standard-definition channels to its lineup and 25 new HD channels as well. That gave it an overall lineup of 55 HD channels.
“We have a more robust offering now,” Swiderski said.
So if broadcasters are going all-digital, and there are clear benefits for cable to do so too, why aren’t more operators making the switch?
Reason No. 1: Competitive advantage. Cable has pledged to distribute local TV stations’ programming in both analog and digital formats until February 2012. Satellite-TV providers can’t make similar commitments — because they offer only digital signals — and the only big telco offering analog TV today, Verizon Communications, is eliminating that by next February. A cable connection could become the only wire that an old TV set can still plug into directly and get old-fashioned analog signals.
Reason No. 2: Bringing analog customers into the digital age all at once would be prohibitively expensive for most operators, because it would require distributing thousands — if not millions — of new set-top boxes.
The FCC estimates there are 40 million analog-only cable customers nationwide, possessing north of 100 million TVs at an average of 2.8 TVs per household (according to Nielsen Media Research). Acquiring that many new digital set-top boxes, to provide service to old analog TVs, would cost more than $7.5 billion at $75 per box.
That figure doesn’t incorporate other costs, like installing the boxes. Nor does it account for digital subscribers who have analog TVs on second or third outlets that would need digital set-tops as well.
RELAX, IT’S CABLE
Given that most operators don’t want to put new set tops in every home served, the industry is trying to make it a competitive plus that the wire already in the wall is all a customer needs to keep an existing analog TV working and retain local TV programming — if what coming through that wire is a cable service.
“Relax. You have cable service from Time Warner Cable,” the second-largest operator tells customers visiting its Web site for DTV information. “As long as your televisions are connected to Time Warner Cable service, you will continue to receive all of your favorite shows and all the great programming you’ve come to expect. We’ve got you covered!”
The message is that cable customers won’t have to do anything, at least for the next three years, to continue receiving the same services.
That’s because even though local affiliates of ABC, CBS, Fox, NBC, PBS and others will drop their over-the-air analog signals, operators will “downconvert” their digital feeds for analog TV viewers. Many broadcasters will be sending only high-definition feeds, which cable operators are required to distribute in high-definition format for must-carry stations. Cable companies may also choose to downconvert that signal into standard-definition digital, to serve the most customers possible.
Last fall, the NCTA kicked off a series of public-service ads which emphasize that cable is ready for the transition. The group said it will place $200 million worth of TV advertising time for the campaign on broadcast and cable networks.
“Every TV that’s hooked up with cable will still work just fine,” say the cable customers featured in the spots.
The campaign also reinforces the point that non-cable customers will be inconvenienced by having to acquire and hook up a converter, so analog TVs can keep receiving over-the-air signals. (This week, the government is set to begin distributing the first of up to 33.5 million $40 coupons toward such converters.) Naturally, the NCTA’s ads don’t mention satellite or phone company services as options.
Meanwhile, cable operators can portray themselves as good corporate citizens just by pledging to deliver analog TV channels for another three years.
The Federal Communications Commission has accepted a plan, pushed by the National Cable & Telecommunications Association, under which cable companies agree to carry programming from local TV stations that opt for mandatory cable carriage in both analog and digital formats. This commitment to dual must-carry lasts until February 2012.
“Our plan reflected our commitment to Congress — which had nothing to do with the FCC — which was we would try to make the transition as seamless for our customers as possible,” NCTA president and CEO Kyle McSlarrow said earlier this month, after several cable programmers sued the FCC over the dual must-carry mandate.
To be sure, cable isn’t turning cartwheels over the three years of delivering both analog and digital feeds to customers. The industry would prefer to have no compulsory carriage, period.
But the DTV provision is preferable to an alternative that lawmakers and the FCC had explored at one time: prohibiting cable operators from downconverting broadcasters’ digital signals to analog. That measure, which the NAB backed until recently, effectively would have forced cable to provide every subscriber to analog service with a digital box.
DECADES OF ANALOG?
Analog TV may live on in some fashion for decades to come, regardless of government regulations.
“Personally I believe there will always be analog channels — 30 years from now, there will still be analog channels,” Scopus Video Networks chief technology officer Adi Bonen during on a discussion panel at the Society of Cable Telecommunications Engineers’ Conference on Emerging Technologies last month.
Bonen said that with technologies like switched digital video, which deliver linear digital channels only when a viewer asks for them, cable operators could conceivably deliver discrete video services to each digital subscriber while keeping an analog tier. “There will be enough spectrum to do everything we need to do, so why eliminate anything?”
Cox, for one, will “continue to offer analog channels for the foreseeable future,” director of media relations David Grabert said. “We haven’t suggested a particular year when we’d cut off analog.”
He added: “For us, it’s a competitive differentiator. The ability to have extra outlets and just plug-and-play with regular TVs is a strong advantage for us over satellite or telco TV.”
At the same time, operators will be steadily shrinking their analog lineups.
For a typical cable system with a 70-channel analog tier, “you’re going to run out of bandwidth if you want to get to 50 HDs without retiring some analog,” Bresnan Communications vice president of strategic engineering Pragash Pillai said.
Comcast in Chicago last summer chopped out 38 analog channels from its expanded-basic tier, freeing up 228 MHz of spectrum. It kept a basic analog service with 34 channels, including local broadcast channels, The Weather Channel, C-SPAN, QVC and a few others.
The move to prune analog channels worries some cable-TV programmers, who fear they’ll be next on the chopping block and stand to lose distribution.
In a joint appeal this month, C-SPAN, Discovery Communications, The Weather Channel, TV One, A&E Television Networks and Scripps Networks sued to block the FCC’s dual must-carry rule.
The FCC’s “favoritism to broadcasters” violates programmers’ “First Amendment right to 'speak’ to cable subscribers when they are forced off, or kept off, cable systems, because the limited available channel space must be given to broadcasters under the dual must-carry rule,” the companies said in a joint statement.
No matter what happens in that suit, NCTA-member operators are sticking with the three-year analog carriage for local broadcasters, according to McSlarrow.
Leading up to Feb. 17, 2009, cable operators still have a fair amount of work left to do with local TV stations to make sure the digital channel is properly converted into analog, NCTA senior vice president of science and technology Bill Check said.
The NAB says 1,628 out of the 1,760 full-power stations, or 93%, are already transmitting digital signals. However, Check said, “by no means, at this point, have the local stations said, 'We know what our plan is.’ ”
Some stations simply will shut off their existing analog feeds and continue to transmit digital signals on different spectrum. Others will choose to move the digital signal into their analog spectrum.
For cable, Check said, labor costs — the video engineers needed to manage the process with broadcast stations — will probably be higher than the digital-to-analog headend equipment operators will need.
Bresnan’s Pillai said an even larger concern for operators is getting the word out to subscribers: “The bigger issue is on customer education — a lot of people think that after the 2009 transition, cable is not going to deliver analog” signals to TV sets.
While big operators are trying to make the best of the DTV cutover, small cable companies are crying foul over the dual must-carry provision, saying it’s not viable for severely bandwidth-crunched systems.
The American Cable Association, which represents 1,100 small operators, is asking the FCC for exemptions to the rule for systems with 552 MHz or less and fewer than 5,000 subscribers.
“You cannot force and squeeze all those requirements into a 550 system,” ACA president and CEO Matt Polka said. “Either the FCC does not understand this point or they’re just ignoring it.”
Plus, the ACA claimed, the costs of converting digital TV to analog are beyond the means of some independents. The association estimates the cost to deploy conversion gear at a minimum of $71,900 per headend.
For a few operators, there was another escape from dual carriage: committing to going all-digital by Feb. 17, 2009.
Here’s how that works. The FCC has granted waivers to its ban on integrated set-tops to more than 120 cable and telco TV operators that committed to eliminating analog service by the DTV transition date.
Why? So those providers could deploy lower-cost digital set-tops, with embedded security, rather than CableCard-based units that most operators were required to deploy after July 1 (which can be more than three times the cost). That, reasoned the FCC, would make it economically feasible for those operators to go all-digital — and therefore be able to offer consumers new services.
The logic behind this policy is tortured, NCTA general counsel Neal Goldberg said, because it erroneously conflates the DTV transition with cable’s own transition to digital. “There’s really no connection between the two,” he said.
But it’s where things stand today. The first beneficiary was Bend Broadband, which has 37,000 video subscribers.
Only 7,000 of those are still on analog. “It became evident that without the low-cost set-top box, it would probably be impossible to go all-digital,” CEO Amy Tykeson said.
Bend Broadband expects all subscribers to have digital set-tops by the end of 2008, at which point the operator will shut off the 52 analog signals it carries today.
And what will it do with all that spectrum — enough for more than 100 new HD channels?
Tykeson just laughed, declining to offer details. “Wideband,” she said, referring to the next generation of cable modems that can deliver more than 100 Megabits per second, “is certainly one of the big things for every cable company.”
Ted Hearn contributed to this report.