Smooth HDTV Rollout Depends on Harmony

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Cable and broadcast television must set aside past
differences and work together if high-definition television is to receive a fair market
test, said broadcasters and consumer electronics executives whose companies have millions
at risk over the technology.

That's not reason enough for cable operators to get
behind HDTV quickly. But those operators that do move quickly stand to gain reputations as
cutting-edge companies, these executives are saying. And those that don't risk facing
the wrath of consumers who believe cable is standing between them and a technological
marvel.

'Cable should match the schedule of the broadcast
station rollouts,' said Joseph Flaherty, senior vice president of technology for CBS
Television. 'Otherwise, could you imagine the backlash from the consumer who goes out
and buys an HDTV set, hooks it up to a cable system and it doesn't work? There's
a disconnect right there.'

It's not clear yet whether cable faces
government-issued must-carry for digital-broadcast signals. Broadcasters want cable
operators to pass through HDTV signals as soon as stations start transmitting them. Under
government mandate, broadcasters in the top television markets will begin sending digital
television signals, which are expected to include HDTV, this fall.

The National Association of Broadcasters believes
must-carry applies not only to analog but to digital signals.

The Federal Communications Commission is expected to
conduct rulemaking on the subject within the next few months, according to Dennis Wharton,
vice president of corporate communications for the NAB.

While both sides are hoping for an amicable resolution, the
industries do not appear close to an agreement.

One complication for digital must-carry is that cable may
be asked to devote channel capacity to both analog- and digital-broadcast signals. And
cable operators are sure to balk at any request to carry multiple signals from a single
broadcaster that chooses standard definition over HDTV.

'Digital must-carry requirements would be terribly
disruptive to the channel lineup' at most cable companies, said David Andersen, vice
president of public affairs for Cox Communications Inc. Andersen said Cox is
technologically prepared to pass through broadcasters' HDTV signals, and plans to
make its nine largest markets the company's first priority.

Time Warner Cable has committed to making an HDTV signal
available as soon as possible in its top 10 markets.

Gary Shapiro, president of the Consumer Electronics
Manufacturers Association, said digital must-carry rules should address picture quality.
'Cable should have some obligation to carry full HDTV,' he said, rather than
digital television with a scanning format of 480 lines, which is not considered true HDTV.

Cablevision Systems Corp. will be testing HDTV in the
1080-interlace scanning format by the end of this year, said Wilt Hildenbrand, the
MSO's vice president of technology. Even without access to digital-broadcast signals,
Cablevision could produce sports events in HDTV from Madison Square Garden and deliver it
by closed circuit television.

'This gives us a chance to plant a flag and generate
interest in the consumer world,' said Hildenbrand.

Sports is 'an excellent vehicle' for showing the
benefits of HDTV, he added, because the wide-screen picture format allows viewers to see
more of the action.

Kay Koplovitz, CEO of USA Network, said she expects to see
some early experimentation in HDTV sports programming. She added, it's much more
expensive to deliver sports than movies in HDTV 'because you're starting from
scratch.'

Home Box Office plans to deliver its main East and West
coast feeds in an HDTV simulcast by the end of this year or early 1999. And Discovery
Channel is targeting mid-1999 for its first HDTV service.

But Steve Effros, president of CATA, said there's no
evidence that most people are unhappy with their television sets today.

While cable programmers have the option of waiting to see
how the market for HDTV develops, broadcasters do not.

'Cable has a fundamental importance because of the
number of homes nationwide that get their signals from cable,' said CBS'
Flaherty.

'The country isn't going to sink into the
ocean' if HDTV doesn't catch on quickly, said Flaherty. But the slower the
technology is adopted, the longer it takes for the government to take back the potentially
lucrative National Television System Committee spectrum.

Effros said that a faster move to digital television could
hurt lower-income TV audiences who don't typically subscribe to cable because it
would take away the NTSC spectrum sooner, forcing those viewers to buy new TVs.

'They're not going to go out and buy $10,000
sets,' said Richard Wiley, former chairman of the FCC Advisory Committee on Advanced
Television Services. 'If the price doesn't fall reasonably quickly, this
isn't going to work for anybody.'

But Wiley, who is 'cautiously optimistic' about
the consumer rollout of HDTV, added that low-income people don't have the option of
flying to New York to see Broadway shows. 'Sometimes home entertainment is all they
have,' he said.

Some broadcasters would be just as happy to see cable
relinquish its hold on their viewers.

'If consumers move to off-air antennas, we don't
have to worry about a cable system that would downconvert a broadcaster's
signals,' said Rob Hubbard, president of Minneapolis-based Hubbard Broadcasting Inc.

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