The DTV process has begun — where are cable operators?
The FCC has announced the conclusion of its fifth report and order regarding digital television (DTV). This exercise is intended to be the catalyst for broadcasters to enter the competitive digital world while maintaining "free" programming to the public. The Commission has effectively pushed many of the complicated technical and marketing issues back to the broadcasters. The Commission has also started the implementation clock, which runs through the year 2006, when analog NTSC broadcast delivery is ended.
While the implications for the broadcasting industry are staggering, the implications for the cable television industry go well beyond yet another multi-channel competitive threat.
The time to consider the effects is now, so that the industry can position itself favorably during the implementation process. Very little in the Report and Order appears set in stone, and substantial change along the way is inevitable.
This article is intended to provide a brief overview of the DTV process and to raise a few key issues for the cable television industry to ponder.A brief overview of the DTV process
The Commission will provide established broadcasters one six-megahertz broadcast channel for digital programming, in addition to the current analog NTSC channel. Each broadcaster will decide whether to provide one high-definition television (HDTV) signal, or multiple digital program streams. One of the digital program streams must be "free," but does not have to be a simulcast of the analog programming. In a strange twist, Chairman Reed Hundt, in his April 3, 1997 statement1, referred to a "reverse simulcast" requirement of the digital programming on the analog channel for the last few years of the transition. This leads to the question: Which digital channel gets simulcast, assuming multiple programs?
The real loser here appears to be HDTV, which was the original impetus for this whole process. By creating the incentive to develop new revenue streams through multiple programming, the broadcasters have little to gain by pursuing a single HDTV program strategy. Remember the "one free digital channel" requirement? The technical standard, known as the ATSC-DTV Standard (Advanced Television Standards Committee — Digital Television), includes both high-definition and standard-definition formats. Presumably, it will be possible to move from single HDTV to multiple DTV programming without separate encoding, decoding, editing and server platforms.
The cable industry was barely mentioned in the Fourth Report and Order, except to note that "cable interests" consistently argued against mandatory transmission standards. The broadcasters and equipment manufacturers effectively argued that "only a Commission-adopted standard will provide the certainty needed by all parties to undertake the transition to DTV"2. This says much about competitive positioning and market adaptation realities, and it also reflects the historical philosophical differences between the cable and broadcast industries.
It appears from Chairman Hundt's comments that the Committee was lobbied hard by strong factions of the broadcast, film, consumer electronics and computer industries regarding video format. Microsoft Corp. was specifically mentioned as being especially helpful in pointing out the benefits of progressive scanning and square pixels. As a result, the FCC, in its Fourth Report and Order for DTV, specifies the ATSC-DTV standard for all layers except video format. Issues such as program aspect ratio and interlaced vs. progressive scanning will be decided in the marketplace.
The official justification for providing broadcasters free spectrum for digital broadcast involves the concept of "spectrum recovery," which is similar, one supposes, to the IRS referring to our taxes as federal government income. This, in essence, means that the broadcasters will give back the analog spectrum at the end of the 10-year transition period.
Through careful allotment, the Commission says it will recover a net 138 MHz (60 MHz immediately and 78 MHz in 10 years). Channels 2 through 51 will be utilized for core DTV spectrum during the transition. The Commission stated in its news release that at the end of the transition period, either Channels 2 through 47, or Channels 7 through 51 would be specified for DTV.
Net spectrum recovery is accomplished by limiting channel assignments above Channel 59. Fewer channels are needed as a result of the propagation and interference characteristics of the new digital transmission plan. The recovered bandwidth, according to Hundt, will provide enormous benefit for the public through assignment or auction. It is important to note that for this plan to work — and the program justification to be valid — analog NTSC broadcast must die.Impact on cable television
Reactions from the cable industry have generally focused on the competitive ramifications of the multi-channel programming scenario. Given the many complexities associated with the new opportunities and existing competition facing the industry, it is not difficult to understand the somewhat muted interest in the DTV process. However, this is a process that is as prime for exploitation as it is generating threat.
One must first consider the world in the year 2006 and believe that the major tenets of the Commission's plan remain intact. While this might be the least likely outcome, it represents a defined starting point where many large interests are currently focused.
The death of analog NTSC broadcast television and the emergence of multi-channel broadcast programming portend several interesting items regarding video entertainment in general, and cable television in particular:
- Digital television sets or consumer-purchased convertors will be universal.
- No relevance between traditional station ID (channel number) and broadcast frequency.
- No technical reason to deliver any analog NTSC to the home.
- Cable, satellite and pre-recordings may be the primary source for HDTV.
- Broadcast stations will either compete individually with 6 MHz or collectively through a third party.
- If DTV, cable and the consumer electronics standards are in sync, the cable and broadcast digital set-top becomes extinct over time.
Assuming that cable operators and program companies have the appropriate level of access control, moving the digital decoding, memory storage and RF demodulation functions into the DTV set should be positive for everyone. The degree of good cheer will largely depend on how the DTV and cable's digital video standards develop. While the initial cable digital video platform and the ATSC DTV standard share certain aspects of the MPEG-2 video standard, they are by no means identical. For example, the data transport and physical (RF modulation) layers are different. The DTV standard contains latitude for market-driven definition of video format, but is very tight in other areas.
The long-term view for cable must include full compatibility with consumer electronics while maintaining viable controlled access by the customer. Anything less is a potential disaster for the cable industry. Remember how "addressable basic" was received by owners of cable-ready television sets in the 1980s? In January 1997, the NCTA and the Consumer Electronics Manufacturers Association (CEMA) announced—following years of intense debate—definition of an advanced interface which provides consumers with access to the inherent features of their equipment while maintaining the cable operator's secure