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HDTV Picture Gets Sharper As MSOs Step Up Rollouts

2/03/2002 7:00 PM Eastern

Joe Sports Enthusiast is the kind of guy who likes to see every fleck of mud on a football jersey and every wad of snow carved up by a downhiller's skis. Thanks to the growing availability of high-definition television broadcasts, he may see more of that this year.

February's Winter Olympics may indeed sharpen the already growing demand for high-definition television. But HDTV sets are still pricey, so there are questions as to how widely the cable-TV masses will adopt the new format.

Sports events are a particularly attractive fit for HDTV. With a 16-to-9 aspect ratio like that of a rectangular movie screen, HD offers a better view of arena sports.

But it's the picture definition that truly marks HDTV. Compared to the 525 lines of resolution found on standard U.S. analog TV screens, HDTV can deliver 720 or 1080 lines, depending on the scanning system used.

Combine that with a frame rate that can nearly double to 60 frames per second, and the result is a much-sharper image than most TV viewers now see.

With the sets necessary to view these crisp images ranging between $1,300 to more than $6,000 in price, HDTV might seem like a high-end market. But it may be just the differentiator cable operators are looking for in their continued battle with satellite competitors.

IT'S A RETAINER

"We want customers who have HD sets to take these set-top boxes because it is a retention device," said Michael Allen, vice president of programming for Canada's Rogers Cable Inc. "If they can get more channels of high-definition with us, and they have a high-definition set, then they are going to stay with us."

The Toronto-based MSO launched HDTV in December in the 70 percent of its Ontario systems that have been upgraded to 750 megahertz.

Since then, the $19.95 (Canadian) monthly offering has attracted 500 customers — even though it wasn't advertised. The number was limited only by the fact Rogers ran out of Scientific-Atlanta Inc. Explorer 3100 high-definition boxes. More set-tops are on order for customers already on a waiting list, Allen said.

NBC has committed to televising the upcoming Salt Lake City Winter Olympics, which run from Feb. 8 through Feb. 24, in HD, so Allen expects that interest will mount. Rogers systems carry WDIV, NBC's Detroit affiliate.

"As soon as we have supply, which should be in the next couple of days, we're going to start putting out some ads," he said. "A lot of people are going to want this come Feb. 8."

In February, Rogers also plans to offer HD-formatted subscription movie and pay-per-view channels, as well as any hockey games broadcast in HDTV. It also intends to expand the HDTV package throughout its territory within about 12 months, after it completes network upgrades.

Set-top box makers said cable vendors have shown increased interest in HDTV. That includes Motorola Inc., which will supply a sidecar tuner to Comcast Corp. cable systems for that MSO's HD service, launched last fall to 1.3 million subscribers in Philadelphia.

For $10.95 per month, Comcast customers can rent the sidecar HDTV receiver and link it to their existing box, which would allow them to receive HDTV-formatted shows from ABC, CBS, NBC, Home Box Office and Showtime. They also have the option to buy the tuner outright for $300.

"We are actually getting a lot of interest from the operators," said Motorola director of strategic marketing Bernadette Vernon. "A number of the other operators have that same mindset as Comcast as well, and are realizing that for a portion of their customer base, HD is very important, and they want to make sure they have a product and a solution to respond to that."

Motorola's new 5100, 5200 and a 52X0 series box all offer integrated HDTV capabilities. The 5100-series boxes are set to debut in spring, "so I think you are going to see a lot of interest as we go through this year with that, because I think the operators are very sensitive to the fact that their subscribers that are interested in HD are high-value customers," Vernon said.

They're likely to be premium digital customers who "have the high-speed [Internet service] and probably are targets also for other services you want to offer down the pike. So you want to make sure you are providing a solution to keep those customers."

S-A: WORKING ON IT

Integrated HD features do make the box more expensive. "It's not exorbitant, but it certainly has a cost associated with it," said Vernon, who didn't provide exact cost figures.

During his company's recent quarterly earnings call, S-A CEO Jim McDonald noted that his company is also developing HDTV products.

"I think, in general, our customers are feeling the demand for HD based set-tops is probably going to go up, at least over the next few years," McDonald said. "Last year, when the Super Bowl hit, it was carried in HDTV, and it generated a pretty big rush for demand that they couldn't take care of. So I think most of them have got the feeling that HDTV services are a way to differentiate themselves, and it is increasing in importance."

Cox Communications Inc. vice president of multimedia technology John Hildenbrand also anticipates growing interest in high-definition service.

The MSO has offered an HDTV channel in Omaha for more than a year. Recently, it launched a second such channel in its North Carolina system, and "certainly, through 2002, I would expect to see more HD launched in Cox in the field," Hildenbrand said.

Cox has already carved out enough bandwidth for six HDTV channels. It is now evaluating strategies that would bring such signals into its headends, along with pricing and packaging plans.

"I think several things have come together for HDTV at this point in time that is causing the MSOs to look at HD more seriously," Hildenbrand said. "No. 1 is the cost of the components, both for the consumer in the TV set and for the cable operator. The cost of the boxes that handle HD — we are at a knee in the curve, where the cost of that is dropping significantly.

"Then, the second factor has to do with the content. So the content has started moving up to the point where there is adequate content available."

But it remains unclear whether HDTV will become must-see TV for the majority of cable television customers, Hildebrand noted.

"There is certainly the videophile element that is highly interested in HDTV and makes a lot of noise about it," he said. "The question is, 'How broad is it, and how does that curve increase over time?' "

While HDTV does require additional bandwidth, Cox isn't overly worried that pressure to add more HDTV channels will cause a logjam in the cable pipe. A decade from now, operators may consider boosting cable-plant capacity beyond 750 mhz, and there technology is developing to fit more HDTV signals within a single 6 mhz channel, Hildebrand noted.

"The technology exists, and so when there is enough demand for the content that you need to expand it, the technology certainly can be done," he said. "But I don't think that that's an issue. We certainly aren't worried about it now."

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