Massillon Cable TV will kick off the final leg of its initiative to phase out analog service starting this summer, using some 100,000 low-cost digital-to-analog converters supplied through Evolution Digital.
Bob Gessner, president of the northeast Ohio cable system operator, said his team evaluated several different options for expanding capacity. They concluded that using the “DTA” adapters to go all-digital would be the most cost-effective way to unlock as much as 500 Megahertz of bandwidth.
The Evolution DTA, manufactured by South Korean-based HomeCast, is 4.9-by-4.9-inch box that includes a power cord and remote control.
Massillon expects to receive the boxes in inventory at the end of June. The DTAs will be free to subscribers until March 2009, after which Massillon will charge a subsidized rate of 25 cents per converter per month (including remote).
Other operators—including Comcast—also plan to use DTAs to go all-digital, as a lower-cost alternative to providing full-blown digital set-tops to basic cable subs who won’t upgrade to a digital tier.
Comcast plans to aggressively use digital-to-analog boxes as the main way to free up near-term capacity in 20% of its markets by the end of 2008, chief operating officer Steve Burke said on the operator’s first-quarter earnings last week.
“We’ll be rolling out [digital-to-analog adapters] pretty aggressively in the fourth quarter,” he said. Burke didn’t specify costs, suppliers or other details.
Massillon, to facilitate its all-digital transition, in March secured a waiver from the Federal Communications Commission to the agency’s integrated set-top ban—on the condition that it phase out analog services by Feb. 17, 2009, the date when local TV broadcasters must stop analog transmissions.
While cable operators aren’t required to cut off analog service by next February, Gessner sees the opportunity to piggyback on the awareness being generated about the over-the-air digital TV transition.
Broadcasters are “spending a billion dollars to tell people they need to ‘do something’ to keep getting TV,” he said. “We can use that to our benefit, since consumers are already expecting a change.”
Massillon, which has around 45,000 basic video subs and 25,000 existing digital set-tops, was expected to announce the program Friday to meet FCC public-disclosure requirements.
Gessner said the operator primarily wants to retire its approximately 75 analog channels to bulk up its digital lineup of 25 HD channels. He wants to add more HD to fight growing competition from satellite as well as AT&T U-verse TV, which Gessner expects to launch in his market shortly.
“People are going to expect everything to be in high-definition,” he said. “The only way to meet that expectation is to start now.”
When Massillon ran the numbers on different options for increasing capacity, the digital-to-analog adapter came out on top.
To upgrade from 750 MHz to 1 Gigahertz, Massillon would have to spend $10 million. But that would add just 100 MHz of usable capacity, according to Gessner, since the operator’s existing digital set-tops tune to 860 MHz.
Meanwhile, buying the cheapest Motorola boxes with integrated security for customers to attach to their analog TVs would have run $7.5 million, he said.
The cost of 100,000 adapters from Evolution Digital will be around $5 million, Gessner estimates.
Centennial, Colo.-based Evolution has 35 full-time employees. Its chairman, John Egan Sr., started the cable networking company Arris Group and ran it for 20 years. Evolution was founded and is owned by his sons John Egan Jr. and Chris Egan, with their partners Brent Smith and Sat Gill.
According to Egan, the two cable technology incumbents -- Motorola and Cisco Systems—have no incentive to deliver low-margin adapters. Instead, he said, they push more expensive alternatives such as upgrading the outside plant or implementing switched digital video.
“The question from them is, ‘Dear Mr. Customer, Where do you want to spend your money first?’” Egan said.
John Burke, Motorola senior vice president and general manager of digital video solutions, countered that the company will deliver on operators’ requirements for adapters: “Certainly, we want to help our customers.”
Massillon’s DTAs will use conditional access from Conax, a subsidiary of Norwegian telecom provider Telenor, rather than the Motorola conditional access the operator currently uses for digital cable. That’s because Motorola doesn’t currently have a DTA offering. The dual encryption setup will require the operator to simulcast digital channels with both conditional access systems.
“I was ready to do it without conditional access but some programmers objected,” Gessner said.
Gessner is confident that the Evolution DTAs meet the FCC criteria as a digital set-top with limited functions. “It’s not interactive, it can’t do HD, it can’t do DVR,” he said.
In any case, Gessner knows the move will be an all-consuming project for the next few months.
“Change is hard,” he said, “no matter how good the story is.”