September 15, 2004 9:00 AM PDT

Tuning up for HDTV

When Riddhi Patel watched her first high-definition television show, one of her suspicions about celebrities was confirmed--they aren't as glamorous as they seem on regular TV.

"It was really amazing. I could see the pimples on the faces of some stars. They really cake on the makeup for the Academy Awards," quipped Patel, an analyst at research firm iSuppli.

News.context

What's new:
It's a new season for HDTV, with a lot more excitement, as high-definition content evolves to keep pace with sales of top-end TVs.

Bottom line:
Despite the impressive developments, consumer confusion about the technology and high prices still spell delays for the high-definition future.

More stories on HDTV

Patel isn't alone. Millions of viewers are discovering new depths and surprises in the old "boob tube," thanks to a long-planned transition from analog to digital transmissions. At the same time, the future of television itself appears to be coming into razor-sharp focus. And it's revealing new vistas for studios, manufacturers and broadcasters--but also some warts, particularly for consumers eager to jump on the trend early.

The new style of television uses digital rather than analog signals and has the potential to be much clearer than old-style TV, whether it's received via cable or over the air. High-definition television (HDTV) is the type of digital TV (DTV) that offers the highest resolution available, above standard-definition and enhanced-definition TV.

DTV and HDTV have been stalled in the wings for years. They're now gaining momentum, thanks to a confluence of forces, including a long-standing federal mandate to shift over-the-air TV broadcasts from analog to digital signals; improvements and lower prices in display and digital storage technologies; heated competition between satellite and cable TV providers; and Hollywood's growing acceptance of the inevitability of the digital evolution.

"There's still a lot of maneuvering, positioning and lobbying that needs to be done," said Michelle Abraham, an analyst at In-Stat/MDR. "But there's no way it's not going to happen. It's just a matter of timing and what kind of effect it will have on the consumer."

Perhaps most significantly, the chicken-and-egg problem that had hurt both HDTV programming and device sales finally shows signs of cracking. Manufacturers were reluctant to invest in HDTV sets without HDTV shows to watch, while programmers didn't want to make the shows before the consumers had the appropriate sets.

Despite that foot-dragging, adoption is picking up speed.

Shipments of digital televisions increased 113 percent, from 1.7 million units to 3.7 million units, from 2002 to 2003, according to iSuppli. Sales estimates predict even faster year-over-year growth this year, up 134 percent to 8.6 million units. Compound growth over the next four years is expected to reach about 46 percent, from 8.6 million units this year to 38.8 million in 2008.

Those sales figures are helping motivate cable operators and broadcasters to fulfill the other half of the digital-TV promise: delivering programming in formats that can take advantage of new devices and high-resolution screens. Commitment to high-definition programming hit a new high this summer, with special high-definition broadcasts of the summer Olympics on NBC.

"New life has been pumped into the DTV transition," Federal Communications Commission Chairman Michael Powell told Congress last week in a written report on the progress of HDTV. This summer, he said, 1,445 DTV stations were on the air, compared to fewer than 200 just three years ago. "High-definition content is booming. Cable has gone from virtually no HDTV programming to offering HDTV service to 84 million homes nationwide."

Federal mandate
Powell has been adamant about the transition from over-the-air broadcasting to digital television, and many of the agency's actions have rippled throughout the industry, getting the ball rolling toward major changes in programming and manufacturing. Powell's reasoning is that the radio spectrum used to broadcast television programming is underutilized and would be better served through reallocation to new wireless uses and public-safety networks.

About 80 percent of consumers currently use cable or satellite services for their television needs. Over-the-air television uses lower bands of the spectrum, which are valuable, because they can travel farther than bands in the upper regions. By freeing up those bands, the FCC can auction off that spectrum, which could be used for new services, such as wireless broadband.

To encourage the transition, the FCC has adopted new rules, including deadlines for manufacturers to incorporate cable card slots into new television sets; for shutting off over-the-air programming for broadcasters; and broadcast flags for content protection.

Now the FCC must figure out a time frame to mandate that over-the-air broadcasts must be turned off, clearing the way to auction the spectrum. The latest proposal is to have 85 percent of households using digital television by Jan. 1, 2009. The previous deadline was January 2007, but that has been determined to be too early.

"2007 was unrealistic--2009 seems more realistic, given the current momentum, and (the industry is) more than on track," said Jim Sanduski, vice president of visual products at Samsung Electronics.

Maker's mark
The transition to digital television comes as the industry has moved from cathode ray tube (CRT) sets to flat-panel screens with liquid crystal displays (LCDs), plasma and projectors.

Nowhere is this more evident than at Sony Electronics. Although the company was at first reluctant to walk away from the high profit margin of its CRT-based businesses, it has embraced the new technologies. Recent hits for the consumer electronics giant include the rear-projection Grand Wega, which sells at retail for between $2,800 and $10,000, depending on size.

Other manufacturers, such as Sharp Electronics, Panasonic and Samsung Electronics, have also intensified their television efforts and have started pumping out larger sets in high quantities, which has helped bring down prices.

Prices differ dramatically, depending on the size of the screens and the technologies, but for the most part, they're all decreasing. Plasma has been the more popular of the technologies, and prices for plasma TVs with screens 40 inches and larger fell 24 percent last year to this year, from an average of $5,320 to $4,020, according to iSuppli data.

"As price falls, adoption ticks up."
--HDNet founder Mark Cuban
says HDTV's growth
will be a familiar story.

Some of the new large flat-panel TVs have built-in set-top box capabilities, simplifying the reception of DTV and HDTV signals. Customers insert a security card, or a cable card they get from their cable operator, to decrypt scrambled cable signals on the sets.

As more consumers buy devices that use digital content, all the various trends will feed into one another, according to Mark Cuban, founder of HDNet.

"HDTV is no different than DVD, PCs, the Net and other technologies. As price falls, adoption ticks up," Cuban wrote in an e-mail. "HD televisions follow the PC price/performance curve, plus you have the sex appeal of LCD and plasmas, so as prices plunge, adoption rises."

Critical content
Further fueling HDTV adoption is the arrival of high-quality HD programming onto DVDs as well as cable, satellite and broadcast networks.

After initially complaining that they were being pushed into a market with little consumer interest, networks such as the Discovery Channel, ESPN, HBO, Showtime and Bravo are upgrading parts or all of their programming into high definition. That's on top of the 1,292 national and local stations offering digital broadcasts, according to the National Association of Broadcasters.

"This is the biggest change in televisionland since color in the early to mid-1960s," said Jeffrey Yorke, a spokesman for NAB.

TV networks and cable providers are still crunching the numbers to figure out the short-term business opportunities related to high-definition broadcasts. That isn't stopping programmers from planting stakes in new territory before competitors do, even if costs outweigh revenue.

"It's early in the game, so I think revenue will come," said Clint Stinchcomb, senior vice president of Discovery HD Theater, which launched in 2002. He expects revenue to come from advertising and shared fees from cable subscriptions.

Cable providers such as Comcast and Time Warner Cable, and satellite services like DirecTV, are also beginning to dip their feet into high definition--moves that are accelerating, thanks to increasing competition between the two.

DirecTV, currently in a fierce market share battle against cable providers, has ramped up plans to tap into the high-definition market. The company last week said it would launch four new satellites to boost HD signals into homes. Two satellites will launch in early 2005, with service beginning midyear, and two more in 2007.

That could force cable companies to increase their own high-definition efforts, which have been limited so far but are gaining steam.

As of June 30, Time Warner Cable had 10.9 million cable subscribers, of whom 4.6 million were receiving digital service. By contrast, just 328,000 subscribed to HD programming. The company offers customers new set-tops at no additional charge upon request, but it is not aggressively marketing the service.

Comcast, the largest cable provider in the United States, has 21.8 million basic subscribers, of which 8.1 million have digital cable. Only 600,000 customers use its high-definition service, which includes an extra fee for set-top rental and installation.

DVDs and the anticipated popularity of high-definition recording technology, such as Blu-ray, could also help fuel demand for HDTV displays, according to iSuppli.

Buyer beware
If things are picking up for HDTV makers and programmers, consumers are still only on the cusp of accessing next-generation television. The leading-edge nature of the emerging technology means that TV viewers and buyers are susceptible to a misunderstanding of what's capable with products.

"There's still a lot of consumer confusion out there," Abraham said, citing the different types of digital television available, from standard-definition to high-definition DTV, as well as the question of whether people need digital tuners. "And there's still the foremost concern: price. HDTVs are still about twice as expensive as similarly sized analog sets."

"There's still a lot of consumer confusion out there. And there's still the foremost concern: price."
--Michelle Abraham, analyst at In-Stat/MDR

Another wild card could be shaping up over antipiracy measures pushed by entertainment companies and TV broadcasters that would limit the use of digital recordings.

The FCC has required consumer electronics manufacturers to build in antipiracy technology that recognizes a "broadcast flag" from DTV signals. Once the devices pick up the flag, the devices will be limited in recording quality and blocked from transfers onto the Internet devices.

Earlier this year, a coalition of public advocacy groups filed a lawsuit against the FCC, claiming that the commission has no authority to set rules for content protection.

"The main reason (for the lawsuit) is, we don't think the FCC has the power in communications law to adopt the broadcast flag," said Gigi Sohn, president of nonprofit group Public Knowledge, which helped file the suit. Other suit participants include the Electronic Frontier Foundation and the American Library Association.

Despite such reservations, DTV makers such as Samsung said they are committed to giving consumers their money's worth.

"Yes, you may have a perfectly good TV, but we're going to give (consumers) a reason to upgrade...picture quality, form factor," as well as lower prices and new content from cable companies and broadcasters, Samsung's Sanduski said.

Add all that up, and consumers may have enough reasons to watch the HDTV transition--that and counting the number of blemishes on the faces of the celebrities.

14 comments

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digital isn't necessarily better
The article states that being digital makes a picture clearer. That isn't true. The difference is that we seem to have skipped DTV and gone straight to HDTV, which mean more lines of resolution creating a better picture. I can just as easily be done in analog as digital. The fact of digital and it's "sampling" means it's missing information. The trick is whether it's information anyone will notice or not.

The advantage of digital, because of the sampling, is that it takes up much less space, less bandwidth, so cable companies, for example, can air many more channels and bundle in other features.

Over air broadcasts will be clearer with Digital, but not necessarily over cable. But digital won't go as far as analog over air either.
Posted by kxmmxk (320 comments )
Reply Link Flag
Consumers aren't making the choices the policy makers believe they are
I would contend that the battle over HDTV is almost entirely an inside struggle between the FCC and the broadcasters over the FCC's timetable for its internal agenda. I believe the adoption of HDTV-capable sets by the public is an incidental outcome from consumers seeking out the new large flat-panel plasma and LCD tv's. The level of resolution available on cable broadcasts, which let us remember are now from mostly digital sources, is so high that the average person with average eyesight can't appreciate the further clarity of HDTV and probably isn't willing to pay extra for it except as a novelty.

HDTV will come, but it will come to an indifferent public that will in the end only adopt it at the minimum cost the industry can get away with tacking on to their cable bills to make up for what the FCC is forcing providers to offer. Television viewers will, in effect, be taxed to pay for other technologies such as cell phones, pagers, and wireless internet used by elite segments of the public.
Posted by Razzl (1318 comments )
Reply Link Flag
You can tell the difference
If you take the average consumer and place them in front of 3
monitors
1) DTV at 480 lines
2) HDTV at 720 lines
3) HDTV at 1080 lines
(yes, first you have to get a monitor that natively supports
1080 lines on the screen -- they exist, but are rare)

I contend that anyone with average eyesight can tell the
difference between the three. I certainly can very easily do so.

I also contend that every consumer would take the 1080 over
the 480 -- if the cost differential were not too excessive. As it si
right now only a very limited number of monitors support the
1080i format natively on the screen and the cost of these is very
high.

There is a difference and people are able to see it.
Posted by shadowself (202 comments )
Link Flag
Good article but covers only half the story...
The consumer should be aware of what is being pushed for many reasons that are not cited in the article, all having to do with industry special interests and a deal-making FCC that is not operating in the public interest.

HDTV technology is great. Fact is that the Japanese have been enjoying it for 20 years. Why are we so behind? Politics.

The FCC allocated about 12 years ago HDTV spectrum (HDTV requires more frequency spectrum) free to broadcasters. Broadcasters in turn decided they would use this spectrum to broadcast more regular definition channels instead of HDTV. The FCC is now looking at pulling the spectrum which would force us all to receive our TV signal from cable or satellite. This is just the tip of the special interest-political iceberg where the consumer is very under-represented.

Don't be confused. There is a difference between DTV and HDTV. One is Digital TV and the other is High Definition TV. Digital TV is pretty much the quality you get on analog cable today so you should not pay more or expect more from DTV. HDTV is an order of magnitude better experience. This not explained in the article and the FCC tries to obfuscate this as much as possible.

Good article, but to do justice to the topic and illuminate consumer choices and rights, two or three more articles are in order.
Posted by (4 comments )
Reply Link Flag
Bunch of Crap...
The whole thing is a bunch of crap. The goverment wants us off analog TV so that they can make some money shelling out the old spectrum. Hollywood wants us with digital everything with content controls so they can charge a fortune for everything and make us pay for more things like recording their already crappy TV shows. The electronics makers want digital so they can make a ton more money as well. The cable and sat. companies want digital so they can charge more for the programming packages because now we can see the warts of Ms. Jackson's boob better and they can add-on other content options to rake in more money for over prices crap.

The only ones that don't really give a hoot is the comsumer who is tired of being raped in to the poor house with nothing to show for it. Frankly, if I am forced to by a new TV and/or equipment I will just stop watching TV all together. I certainaly am not going to pay or more with the content protection crap. They have that already taken care of with all of the commercials, the mini-commercials at the bottom of the screen when they come back from a commerical. The bleeping of so called dirty or offensive works, scruntched credits and lets not forget totally uncreative, booring and uninteresting shows to start with.

Robert
Posted by (336 comments )
Reply Link Flag
Goodbye...
Relax and go in peace. No one is going to notice your
departure....or care.
Posted by Earl Benser (4310 comments )
Link Flag
Another issue
The article does not even touch on one of the issues: the
resolution mess.

There is 720i, 720p, 1080i, and eventually 1080p.

Almost all the major brands claim to be 720i, 720p and 1080i
compatible, but virtually all only show it onscreen at 720i or
720p. Compatible does not mean screen resolution. There are
only a couple shipping monitors that natively support 1080
(either form) on screen. Even IF the imagery coming in is 1080p
the system downsamples it to 720 on virtually all systems.

All but one of the several dozen salespeople I have talked to in
the last six months have no idea this is happening. If the sales
people don't know what's happening how does anyone expect
the general public to know what's going on?

It was simpler 50 years ago. In the US there was NTSC and only
NTSC. There was only one resolution.

If the FCC is going to allow the broadcasters to wait until 2009
to turn in the NTSC bands then they should REQUIRE everone go
to 1080p. No exceptions. The technology will be ready for
1080p long before 2009. If the networks can't get ready in the
next 4.25 years they never will.

The bottom line is they just don't want to. They have millions
invested in NTSC and DTV systems at the lower resolutions.
They don't want to move forward until all that hardware is on the
junk pile. That won't happen for another decade or two.

If the FCC is going to allow this mix of resolutions and formats
then the FCC should hold onto the 1 January 2007 date -- no
exceptions.
Posted by shadowself (202 comments )
Reply Link Flag
Sales People.......
It has always been my experience that it is the rare breed of salesman that "actually" knows much of anything about what he sells. They just simply make things "sound" or "look" nice to entice you to buy.
Posted by Prndll (382 comments )
Link Flag
Not so fast......
There are only a limited number of HDTV formats currently
planned/in use, 720p and 1080i. There is currently no 1080p,
nor is there likely to be one until digitl display technology can
develop reliable LCD, DLP, or other techniques to do 1080p. And
when the currnt projection tube models are dropped from
production, 1080i will be dropped too.
Posted by Earl Benser (4310 comments )
Link Flag
FCC not representing the citizens - or even what is good for them!
The idea that we all should be forced into replacing all television sets by 2009 to make more room for wireless is ludicris. Currently, I have analog cable and am satisifed with the service.
I don't want digital service, nor do I want the expense of a new receiver.

Right now, my cable setup permits me to split the incoming feed into 3 devices - my tele, my tivo, and my vcr. This permits me to make full use of each of these devices.

When I am forced (and it WILL be forced) to move to a settop, then I will have to either lease 3 settops (and possibly 3 lines of service) or do without some of the functionality.

And the 'benefit'? Well, I don't really care to see everyone's zits, so clarity isn't going to benefit me much. And in fact, few of the shows I watch are likely to be in hdtv (older movies, series, etc.). I don't want the cable company's PVR/DVR - they don't have as nice of features as my tivo. And I don't care about the 'more channels' since the cable company wants me to spend $20 or more a month for the right to access a small number of relatively useless channels to get the one or two that might be of some interest.

So I will be faced with spending up front $600 or more for the new receiver and decoder, plus potentially another $40 a month for at least one more settop and lose functionality. Doesn't seem like a consumer win to me.
Posted by lvirden (5 comments )
Reply Link Flag
It all depends...
..on what you want from TV. Tivo sucks, but that's not new.
'Tele' makes it sound like you're in, maybe, England where TV
definitely lacks quality and you need annual licenses for each
receiver.

Anyhow, 4x3 analog TV is a loser's game - it was from the very
first time the FCC compromised quality in therir decisions. Now,
DTV annd HDTV can begin to rectify those errors.

And if you don't have the imagination or skill to hook up HDTV
to your video system, check with the chaps at Radio Shack,
Posted by Earl Benser (4310 comments )
Link Flag
 

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