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Cable and DBS are getting a new multichannel video competitor, at least in Salt Lake City, Las Vegas and Albuquerque. USDTV is leasing capacity from existing TV stations and using that capacity to deliver a package of 11 cable channels and 8 broadcast channels for $19.95 per month. Another company has similar plans. Here's the idea.
Recall that a broadcaster has a digital television channel that has a payload capacity of 19 Mbps. That's enough to carry a high definition TV program. Maybe a little more than enough. But there isn't a lot of HD programming, and it is mainly the network affiliate TV stations that carry any HD programming. So TV stations that are so-called "independents" are using their DTV channel to carry standard definition programming. That doesn't take up 19 Mbps, maybe more like 4 Mbps. So they have spare capacity.
This notion of using a DTV station's spare digital capacity isn't new. Four years ago, I wrote about Geocast, iBlast and other companies that planned to lease spare DTV capacity and use it for data broadcasting. (See "Another flavor of must-carry," June 2000 CED.)
At that time, the issue I wrote about was the business relationship between TV networks and their affiliates, and why the networks were unhappy that their affiliates were thinking about leasing part of their capacity.
I never understood what a data broadcasting service is, and I still don't. Maybe what I should have been writing about was whether that concept made any business sense. Evidently it didn't, because Geocast and iBlast seem to have closed up shop.
So for USDTV, the network/affiliate relationship issue does not seem to arise, because USDTV is only partnering with independents. And anyway, the network affiliates need to carry HD programming, at least during some parts of the day, so they don't have spare capacity.
But there is still the question of whether this makes business sense. A subscriber has to buy a $99 box that receives the free off-air digital programming and descrambles the 11 cable channels that USDTV carries. (Question: Can they really sell a digital off-air tuner box for $99? Answer: They're doing it–but they expect you to buy the razor blades, too.)
Eleven cable channels isn't very many, but they haven't exhausted their options. The 11 channels are delivered using MPEG-2 digital compression. But there are now more efficient video coding techniques, such as Microsoft's VC-9. USDTV recently announced that it would support VC-9, which might allow TV programs to be carried in half the data rate of MPEG-2.
From a technology perspective, the potential rollout of VC-9 video coding is the most interesting aspect of the service. Now that cable is committed to the CEA-NCTA Plug & Play agreement, it will be very difficult to deploy new video coding methods. Ditto for DirecTV and Echostar, because of their huge base of legacy set-top boxes. But USDTV has a very small legacy problem in its initial three cities, and none in the cities it plans to add.
USDTV plans to roll out its service in 30 cities by the end of the year. But it won't be able to do that if Emmis gets there first. Emmis Communications Corp., which owns 16 TV stations (14 are network affiliates) and has the support of many more TV station owners, has proposed a multichannel service of 25 to 30 cable networks, for $25 a month. So you can expect to see TV station owners aligning themselves with either USDTV or Emmis. And maybe neither one will achieve critical mass.
If either one does succeed, or if they merge, it will surely confuse consumers who are shopping for digital TVs. They will be looking for cable-ready DTV receivers that conform to the CEA-NCTA Plug & Play agreement, receivers that connect directly to a cable system without the need for a set-top box. And instead they will be confronted with a $99 set-top box. No, I don't think it is likely that Sony will be building USDTV-ready and Emmis-ready TVs to go along with their cable-ready Plug & Play TVs.
And every TV station that leases spectrum to USDTV or Emmis is one less station carrying HD programming. The fewer the stations that carry HD programming, the less incentive there is to buy a new digital TV set. Not only is the consumer confused about what he needs to buy, but he will soon understand that many of the TV stations in town may never carry HD programming. That will slow down the transition from NTSC to DTV. The FCC won't be happy.
It may be that success or failure of the USDTV/Emmis concept will depend on consumer demand for HD programming. Even though USDTV carries Discovery, it will never be able to carry Discovery HD Theater. Ditto for Disney HD; ditto for ESPN HD. Is there enough demand to support a low-cost, low- quantity (and some will say "low-quality") multichannel video service? I'm skeptical, but we will see.
But at least it's better than the Geocast and iBlast plans to sell data broadcasting. At least I understand what USDTV is selling.
Have a comment? Contact Jeff via e-mail at: jkrauss@cpcug.org
