The Future of HD

by Kevin Ray

recently read an article in Newsweek by Johnnie L. Roberts about the future of high-definition broadcasting that I found very interesting. So, I thought I’d share some of the highlights of what I read with you.

The article is about a man named John Malone. Mr. Malone built a cable empire that was so powerful he was dubbed “Darth Vader” by none other than Al Gore. His annexation of competitors, along with his insistence that cable channels wanting to be on his systems pay homage to him, earned him the reputation as a ruthless man by his critics. At the height of his reign in the cable industry in 1998, his company, Tele-Communications, Inc. had 14 million customers. It was at this time that he sold out to AT&T and retired to Denver as a billionaire content to be a passive media investor.

Well, it seems that Mr. Malone has gotten bored and wants to play again. Only this time he’s decided to jolt the cable industry with an $11 billion deal that gives him 40% interest and control of satellite TV leader DirecTV which currently has 15.5 million customers. He is also exploring the possibilities for future projects with Dish Network, the No. 2 satellite provider.

Mr. Malone, it appears, wants to become the Commander in Chief of HD, and he plans on firing the first salvo by launching two new DirecTV satellites which will allow for the addition of 100 new HD channels including CNN and FX. This will give DirecTV three times the HD programming of anyone else. This presents a real conundrum for the cable guys because high-def needs a lot of bandwidth, which is something the cable guys are short on.

Mr. Malone will still have some serious challenges from the old-media broadcasters to compete in cyberspace with digital behemoths like Google and pesky rookies like YouTube. Comcast, Time Warner, and other cable giants currently offer broadband and phone service, making it tempting for customers to opt for the 1-2-3 punch of packages that include TV, telephone, and Internet. Verizon, AT&T, and other telephone companies are launching a counter offensive by infiltrating television and Internet access. Conversely, DirecTV and Dish are developing partnerships with telephone companies so that they can offer phone and Internet service.

HD’s influence on the television world began in the mid ‘90s after the Federal Communications Commission (FCC) mandated a shift from analog broadcasting to digital. Remarkably, digital and high-def have been merging into the mainstream TV market with great success and fanfare with the prices for digital sets coming down from the stratosphere to an altitude that average Americans can reach. According to the Consumer Electronics Association, most people can acquire an HDTV for an average cost of $900. The most popular TV series are offered in HD, and sports offerings have really taken off. Major networks such as USA and MTV will be joining the HD convoy this year.

It appears that Mr. Malone is posturing for the same type of revolution that he launched with cable TV in the ‘90s, and his method it seems will be the same. Gently persuade your competitors to your side. In an interview with trade magazine Broadcasting and Cable where Mr. Malone delivered the news about his DirecTV deal, Malone suggested that a new, 100% HD service jointly operated by DirecTV and Dish could be created. He also suggested that these two entities would produce their own HD programs which is a niche currently dominated by Hollywood and the big TV networks. The outright acquisition of Dish’s parent company EchoStar was downplayed by Mr. Malone.

There is an existing 15 channel network called Voom HD Network that is operated by Rainbow Media, a division of Cable-Vision, but is broadcast solely on Dish. This is because EchoStar which owns Dish also partially owns Voom. Oh, what a wicked web we weave! Reportedly, Mr. Malone’s acquisition of Voom would be welcomed by Carl Vogel, president of EchoStar. This is an interesting scenario given the fact that EchoStar (Dish) and DirecTV would remain staunch rivals. According to Mr. Vogel, Dish plans to embark on an aggressive pricing campaign offering such trinkets as cheaper HD bundles that include HD digital video recorders and $10 rebates.

Not to be outdone! The biggest cable companies, Time Warner and Comcast currently offer the majority of 28 HD networks such as HBO and ESPN. These guys can provide something that the satellite guys can’t: local HD programming. DirecTV and Dish are both looking to their new satellites to remedy the local HD situation, as well as provide additional HD. The cable guys are returning serve with on-demand HD movies and television shows which don’t consume as much bandwidth as a complete HD channel. Last September Comcast introduced Video-On-Demand (VOD), and they plan to increase their programming from 100 hours to 200 hours this year.

If you are curious about what will happen if you don’t want to, or are unable to buy a new digital TV, in December 2005, the Senate passed a budget bill that calls for over-the-air television stations to cease their analog broadcasts by February 17, 2009. Don’t panic! Lawmakers propose to subsidize converter boxes that would allow people to watch the new digital broadcasts on their old analog TVs. Further details on the transition to digital and the converter box subsidy are still being worked out, and given the slow progress over the last 9 years since the introduction of digital and HDTV, we wouldn’t be surprised to hear of more changes before 2009.

So who will win in this intense High Definition battle? You and I will, and we’ll get to view the battlefield in virtual 3D! Don’t you just love capitalism!

This article provided by Kevin Ray of Custom Audio Video, LLC. Member CEDIA (Custom Electronic Design & Installation Association)