As HDTV Nears, Confusion Grows

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With the first market launches of digital-television
broadcasts less than one week away, cable operators, retailers and television
manufacturers are gearing up for an onslaught of questions from confused consumers.

Cable operators are preparing consumer handouts that will
address the most common issues, such as how digital broadcast differs from digital cable.

And customer-service agents at some MSOs' call centers
are studying scripts that will tell consumers when the operators will be able to offer
high-definition feeds.

Time Warner Cable will offer a short-term technical
solution to customers who want cable-delivered high-definition feeds in broadcast markets
that launch digital this year, although the MSO won't actively promote the option
this year.

Michael Luftman, vice president of public affairs for Time
Warner, said he expects customers who buy HDTV sets to contact Time Warner directly and
schedule service appointments.

"Our best customers will be the first ones to buy HDTV
sets," Luftman said, "and we want to be able to serve them."

Ultimately, Time Warner will use so-called Pegasus digital
set-tops to route HDTV signals to subscribers' televisions, but that's not
possible today, because technical standards have not yet been finalized.

"This will be a great way to get the Pegasus box into
the home and to sell additional services," Luftman said.

The technical solutions available to cable operators for
passing through digital-broadcast signals are pricey, and they won't be available in
the necessary quantities until early next year.

Last week, for example, Scientific-Atlanta Inc. detailed a
$1,000 set-top that assuages the myriad of HDTV issues by decoding the high-definition
stream in the set-top box and stripping it into analog component-video outputs.

The box costs roughly $650 more than S-A's existing
advanced set-top, the Explorer 2000. The extra processing requires a "daughter
card" that houses 10 megabytes of memory and expensive HDTV-decoding circuits, said
Bill Wall, chief scientist for the manufacturer.

At a certain point, all digital set-tops will be capable of
passing through high-definition signals, said Steve Burke, president of Comcast's
Corp.'s cable division, Comcast Cable Communications. Comcast plans to deliver
next-generation digital boxes capable of passing through digital-broadcast signals by next
spring.

"The number of people with high-definition sets
between now and next spring will be fairly small," Burke said, especially when
crossed against areas where Comcast offers its digital-cable services.

Burke added that Comcast customers with HDTV sets will be
able to access digital-broadcast signals over cable this year if they purchase additional
set-top boxes costing more than $1,000.

MediaOne will test a device that can pass through
broadcasters' digital signals in its Northeast region, said Steve Lang, the
MSO's executive director of financial and corporate communications. In the meantime,
subscribers who buy HDTV sets can still get digital-broadcast signals through off-air
antennae "from day one," as long as the geography is right, he added.

Broadcasters and consumer-electronics manufacturers hope
that consumers will adopt off-air antennae again, but they're not dismissing the role
that cable plays in delivering television today.

"We're certainly not blind to the fact that seven
out of 10 people get their programming from cable today," said Bryan Watson, manager
of sales training for Thomson Consumer Electronics.

Thomson announced last week that it will begin aggressive
retail-sales training for its HDTV products this week in New York, Los Angeles and
Washington, D.C.

"Our hope is that we can give retailers accurate
information," Watson said. "We just want to be honest: That's what
consumers want."

The top concerns among consumers, Watson said, are whether
their current televisions are about to become obsolete and whether there will be any
programming available.

"Nobody said these sets are going to be inexpensive,
so they might as well have something to watch," Watson said.

At about $7,000, Thomson's first HDTV sets will
integrate HDTV displays and digital-broadcast tuners, as well as DirecTv Inc. systems
capable of receiving HDTV signals from DirecTv and U.S. Satellite Broadcasting once
they're delivered early next year.

"With broadcasters, we know that the HDTV programming
is not going to be more than a few hours a week," Watson said. "If you buy an
HDTV set, you want to have HDTV signals available."

At least one MSO, Cablevision Systems Corp., plans to
produce HDTV programming -- such as New York Knicks National Basketball Association and
New York Rangers National Hockey League games -- beginning this season. The company plans
to announce its HDTV strategy Tuesday (Oct. 27) at Madison Square Garden in New York.

"For viewers, the change to HDTV will be as dramatic
as the change from black-and-white to color TV," said James L. Dolan, president and
CEO of Cablevision, in a written reply for an interview request. "Now that the
technology is here, programmers must produce content in the new format, retailers must
support the marketing and sales of HDTVs and cable operators must make bandwidth available
to deliver the signal. Cablevision is moving aggressively in each of these areas."

Cox Communications Inc. has no immediate plans to launch
HDTV, according to spokeswoman Amy Porter.

"It's really unclear what consumer demand will
be," she said. "We'll take a wait-and-see approach."

Time Warner is in "advanced negotiations" with
several broadcast networks about HDTV carriage, Luftman said.

Lang said it would be a mistake to equate the
industry's opposition to digital must-carry with a resistant to carrying HDTV
signals.

Steve Effros, president of the Cable Telecommunications
Association (CATA), said operators should position themselves as a reliable source of
information on HDTV, which he called a very good product that will take a long time to
roll out.

And it's not just a matter of price: It's also
distribution. While Thomson has already started shipping its first RCA HDTV sets, they are
demonstration models only, and they won't be available for retail sale until early
next year.

Watson said Thomson will instruct its dealers to be honest
about the issue of cable compatibility.

"Unfortunately, there's no standard yet on
digital connectivity or must-carry," he said.

Effros said cable operators should not confuse the issue by
addressing digital must-carry with consumers.

CATA is producing a consumer brochure on digital
broadcasting that cable operators can hand out to their customers.

Leslie Ellis contributed to this story.

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