Handy Dandy Tactics Vindicated

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Humbug comes into its own at this time of year. From this
curmudgeonly corner, it's time to check out the latest gift-wrap litter along the
digital I-way.

The CBS-Time Warner Cable HDTV-retransmission deal:
Time Warner Cable agreed to carry all of the digital-TV signals -- high-definition or
otherwise -- of CBS-owned broadcast stations on its updated digital-cable systems. The
offer extends to CBS affiliates, too. Time Warner says it is negotiating similar pacts
with other broadcasters, and it hopes to reveal more agreements "soon."

This "will-carry" arrangement makes Time Warner
Cable -- and, possibly, the entire cable industry -- look cooperative in the
digital-retransmission skirmish, without giving an inch on must-carry.

It's especially attractive if you live in the metro
New York City area, where Time Warner is your cable operator. If you need a good reason to
splurge for that $6,000 HDTV projection set: all of those CBS high-definition football
games!

But what's wrong with this picture? It's a noble
deal, yet only a relative handful of Time Warner Cable systems and customers are in or
near markets where CBS owns stations -- to be precise, five metro areas reaching about 2
million households.

Matching CBS' biggest markets (aside from New York) to
Time Warner Cable's presence comes up with a scattering of commitments. The MSO has
about 330,000 customers in the Los Angeles area, mostly in the San Fernando Valley, where
about one-half of the system has been upgraded to digital.

In metro Philadelphia, Time Warner has barely 60,000
customers. Its systems in the Houston area reach about 304,000 homes (which are all
digitally upgraded), although that ratio will change when Time Warner completes its joint
venture with Tele-Communications Inc. to manage several hundred-thousand more customers in
that region.

As for CBS markets such as Chicago, Minneapolis, San
Francisco and St. Louis, Time Warner is almost invisible.

In the spirit of the season, though, the
"will-carry" deal is a cost-free gesture. It encourages belief in the
1080-interlaced HDTV format (to which CBS, alone among networks, is fiercely loyal). And
it may turn out to be a model for carriage of CBS affiliates in markets where Time Warner
is a real player.

Does anyone want HDTV? The CBS-Time Warner agreement
forces us to confront the Christmas-gift aspects of digital TV. Those projection sets
won't fit under your tree unless you're using the giant pine out on the back
lot, in which case every HDTV set sold in the United States this year may fit under your
tree.

The Consumer Electronics Manufacturers Association stands
by its claim that 50,000 HDTV sets will be sold during the first 12 months that they are
available -- that is, through November 1999. Yet many CEMA members that are slow in
bringing their sets to market are trying to manage expectations downward, into the 25,000
to 35,000 range.

Nonetheless, CEMA executives went ballistic when Forrester
Research predicted a couple of weeks ago that fewer than 1 million HDTV sets will reach
American homes by 2003, and that the price of HDTV equipment will remain above $2,000 for
at least a decade.

"Wrong," barked CEMA, in its finest McLaughlinian
tones, citing its own research that 10 million homes will have HDTV equipment by 2003, and
noting that 20 million homes already have TV equipment costing more than $2,000.

Meanwhile, a Horowitz Associates poll suggests that 63
percent of cable viewers want digital TV for better pictures, 50 percent want more
channels and 27 percent are looking for interactive video games. The study also finds that
only 22 percent of consumers say they want HDTV (wide-screen picture/high-quality sound),
compared with 33 percent who favor using the digital spectrum for delivering more
channels.

Of course, both options lose out to the 35 percent in the
Horowitz poll who are undecided. And if they're undecided, it's hard to expect
them to buy high-priced new equipment to see an occasional football game or CBS special.

What's taking OpenCable so long? Yes, we all know
that this is hard and becoming harder as new technologies pour into the mix. As Cable
Television Laboratories Inc. admitted during the Western Show, the OpenCable process has
stretched beyond set-top boxes, and it now affects the technology of digital-TV sets,
personal computers, DVD and "a whole new world of digital consumer electronics."

Funny, CEMA thought that was its territory.

The lack of standards is discouraging (gee, you could use
that phrase on Capitol Hill this week, as Congress puts coal in Clinton's stocking.).

But in the case of OpenCable -- and the cable-modem DOCSIS
process, too -- these lengthy delays just add to everyone's frustration. Customers
won't buy a product if they think that it's a work in progress. The whole idea
of "pre-DOCSIS" is consumer-surly. OpenCable that isn't completely
"open" is doomed.

The HDTV manufacturers will find that out in their
business, especially since the first units on the market don't include "fire
wire" or other interconnectivity features that cognoscente expect, and that they know
will be available in upcoming versions.

Cable boxes -- the industry's first consumer retail
product -- better be right on the first try. And that seems to answer the question about
what's taking OpenCable so long to emerge from its technical morass.

Not everyone has to be the first on the block with the
latest gizmo. You just want something that will last into the New Year, and maybe longer.

I-Way Patrol columnist Gary Arlen understands Scrooge a
little better every year at this time.

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