Two Years In, HDTVs Still Toddling

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Roughly two years after U.S. high-definition television broadcasting began, cable TV continues to play a minor if slightly growing role in the transition from analog to digital.

And despite the success of digital cable, HDTV remains a secondary service, one plagued by a small subscriber base and unresolved technical, regulatory and business issues.

Cable MSOs have not reported the exact number of cable households that receive high-definition programming over their systems. But based on conversations with the leading system operators, digital set-top box vendors and programmers, the total is believed to be in the low thousands at most.

"There's not been much demand" for Motorola's HD- capable hardware, said Motorola Broadband Communications Sector senior vice president and general manager for digital set-top boxes Dave Robinson.

Added a senior executive at one top-five MSO who requested anonymity: "We don't have many [subscribers] and I don't see much movement. There's not much incentive to move on this."

Operators, programmers and consumer-electronics manufacturers are continuing to blame each other in the ongoing chicken-vs.-egg debate over the digital transition's slow pace. In passing the blame, however, each group has maintained consistent views: HDTV receivers cost too much, there is too little programming and carriage agreements for HD broadcasters are too few.

HBO'S HEAD START

At the Consumer Electronics Association's recent digital-TV conference in New York, Home Box Office senior vice president Bob Zitter noted that the pay TV programmer's schedule-which includes roughly 15 hours a day of movies that originate in HDTV-is more than what's offered by all of the other cable networks and broadcasters, combined.

"Before we increase the amount of high definition [programming] that we do we'd like the rest of the world to catch up," Zitter said.

While DTV receiver pricing remains relatively high-and there are still no receivers with a direct interface to digital cable set-top boxes, Zitter noted-the biggest issue remains the inability of broadcasters to offer consumers any reason to buy DTV receivers, Zitter insisted.

"You need differentiated content," he asserted.

There's widespread agreement that movies-on-demand and sports-the two programming categories that catapulted direct-broadcast satellite into a mass-market alternative to cable-need to go to HD to create a compelling reason for consumers to invest in expensive receiving equipment.

With limited exceptions-including some National Football League games on CBS and ABC and Madison Square Garden Network's local New York Knicks and New York Rangers telecasts-HDTV sports programming remains very much a special-event genre. And the major studios have refused to support HDTV pay-per-view without even an agreement on digital copy protection.

The absence of a cross- industry agreement on digital copy protection remains "the single biggest impediment" to DirecTV Inc.'s obtaining additional high-definition content, senior vice president Dave Baylor said at the conference.

Added Jim Chiddix, Time Warner Cable's senior vice president for technical operations: "All the industries [with a stake in digital TV] need to move together on this."

Time Warner, Chiddix said, "clearly intends to have a digital connection with copy protection [between cable boxes and digital-TV receivers]."

But the form of the exact solution-whether the Institute of Electrical and Electronics Engineers'"IEEE-1394" standard with "5C" copy protection, Intel Corp.'s "Digital Visual Interface" with "High Definition Copy Protection" (HDCP), or something else-will depend on the results of ongoing negotiations between studios, the consumer-electronics and cable industries, the various copyright-protection alliances and other groups.

As of early November, the major motion picture studios and the 5C copy protection alliance of Hitachi Ltd., Intel, Matsushita Consumer Electronics, Sony Corp. and Toshiba America Consumer Products were still locked in seemingly endless negotiations that have now dragged on for close to three years.

While negotiators on both sides have said they are continuing to make progress, neither group in recent weeks has indicated when it expects to reach a final agreement on licensing terms for the use of 5C content protection.

That has also held up release of a final licensing agreement for the DFAST content-protection system that will be used in point-of- deployment modules and digital cable boxes compliant with Cable Television Laboratories Inc.'s "OpenCable" standard.

"We are making progress," said CableLabs president Richard Green of an agreement on digital-content protection for cable boxes. "We continue to negotiate with [the Motion Picture Association of America] and [5C's Digital Transmission Licensing Administration]."

'FORMAT WAR' LOOMS

Though there's been a widely shared assumption that IEEE-1394 with 5C will be the cross-industry standard for digital cable set-top boxes, digital TV receivers and related equipment, Intel's DVI remains the dark-horse candidate.

DVI with HDCP "may be a better choice" than 1394 with 5C, Chiddix said, because it's an uncompressed interface that's easier to integrate an electronic program guide and other features.

There is, in fact, a chance that a digital-interface and content-protection "format war" could emerge next year. DVI has picked up some support this year-direct-broadcast satellite provider EchoStar Communications Corp. endorsed it for next-generation Dish Network receivers and JVC Co. of America plans to use it for D-VHS VCRs-but there's greater support for 1394 with 5C.

A 1394 interface with 5C will be used in the Sony digital-cable boxes that Cablevision Systems Corp. will begin to deploy in December. Next-generation Motorola "DCT-5000" set-tops with integrated HDTV decoders are also expected to ship sometime in the first quarter next year.

One piece of the copy-protection puzzle was somewhat clarified in October. That's when Digital Millennium Copyright Act prohibitions on circumventing technological copy-protection measures for digital works quietly went into effect, two years after the DMCA itself became effective.

A U.S. Copyright Office rulemaking issued just days before the prohibitions went into effect did not carve out any audio or video fair-use exemptions for circumventing digital copy protection and, as a result, eliminated another piece of uncertainty surrounding 5C licensing negotiations.

Still, the Copyright Office report contained enough thinly veiled threats of further action to suggest content owners still face fair use-based challenges to content-protection schemes.

"If, in the next three years, copyright owners impose access controls in unreasonable ways that adversely affect the ability of users to engage in non-infringing uses, it is likely that the next rulemaking will result in more substantial exemptions," the report said. But it also noted that "many of the complaints aired in this rulemaking" related to licensing terms for copy protection measures rather than the measures themselves.

One indication that the cable industry, at least, expects an agreement on 5C: An increasing number of MSOs are specifying 1394 digital interfaces with 5C content protection in digital cable boxes they have been ordering in recent months.

"It's in the 5000," noted Motorola's Robinson.

Another positive HDTV development on the hardware side: The first relatively low-priced digital-cable boxes capable of decoding a high definition program stream should begin shipping early next year. Those boxes will also remove another impediment for cable operators by providing a 256 quadrature amplitude modulation (QAM) solution, so operators will no longer have to pass through an 8-VSB signal.

Perhaps more important will be the significant cost reduction that will come with HD-capable cable boxes next year. While the current HDTV cable set-top "sidecars" that Motorola has shipped in limited quantities cost about $1,000, the DCT-5000 with HDTV decoding will carry roughly a $50 premium over standard DCT-5000 boxes, depending on memory, Robinson says.

That's roughly the same price differential that Scientific-Atlanta Inc. and other digital-cable set-top vendors expect to charge when they ship similar product.

Although S-A has not said when it plans to move from the current high priced "limited production" HD-capable Explorer 2000 to a lower-priced version, sources familiar with the company's plans say S-A expects to ship an HD-capable Explorer 2000 with about a $50 premium by the first quarter next year.

Whether that has any immediate impact on HDTV programming, though, remains open to debate. Ironically, content producers appear to be stepping up the production of high definition programming even as most of the broadcast TV networks seem to be pulling back from any commitment to HDTV program origination.

"I am awed by the content that is out in the marketplace," Deborah Stewart, vice president for programming at Discovery Digital Networks and Advanced Television, said at the same CEA digital TV conference in New York.

Stewart earlier this year was given a corporate mandate to acquire 100 hours of high-definition programming. "We're almost there," she said.

But with the exception of CBS, the big four broadcast-TV networks have shown little inclination to do more than upconvert standard analog programming to one of the standard-definition or high-definition transmission formats that are part of the ATSAC standard. For the most part, Fox remains committed to 480p standard definition digital TV; sources close to ABC said network executives see little reason to invest in HD program origination.

Broadcast-network HDTV programming would be even more sparce without equipment manufacturers footing all or part of the bill. That's been the case with CBS' primetime lineup, and ABC's limited telecasts of
Monday Night Football
, all of which were subsidized to some extent.

With Panasonic footing the bill, CBS is originating 17 of its 18 primetime entertainment shows in HDTV this season. That's "slightly ahead of what we did last year," a CBS spokesman said after the announcement in late September.

Apart from news-oriented shows-
60 Minutes II

and
48 Hours

-the only other primetime show not covered is
Walker, Texas Ranger
, which is shot in 16-millimeter rather than the 35-mm film that can be readily converted to HD.

The agreement with Panasonic represents the fourth hardware manufacturer to subsidize the cost of CBS' HDTV schedule. Neither company will say exactly how much money Panasonic committed, though Panasonic vice president Bill Mannion says it represents "millions of dollars."

In exchange for underwriting the cost of HDTV origination, Panasonic gets a banner that runs at the start of every show noting that it is "presented in HDTV" courtesy of the consumer-electronics manufacturer.

CBS said 31 owned or affiliated stations are broadcasting a digital signal and 39 will transmit in digital by the end of the year.

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