On March 29, 2004, the Consumer Electronics Association (ce.org) hosted a one-day conference at the Washington Convention Center in Washington DC. The name of the annual conference was HDTV: Partnership, Policy, and Profits. The attendees included representatives of the government (particularly the FCC and the Congress), trade associations, trade press, broadcasters, cable, programmers, and equipment makers.
It has been a very long time since the first HDTV prototypes were developed at NHK. Over the past decade, there have been significant reductions in the cost of digital technology. Industry groups have been able to draft agreeable standards. The most important, the Advanced Television Systems Committee (ATSC.org) (formerly known as the Grand Alliance) has created the standard for terrestrial digital television transmission in the United States. This standard, which has been adopted by the FCC, becomes the center of a larger set of standards and conventions.
To date, according to CEA, approximately 1.2 million over-the-air digital television tuners have been sold in the US, either integrated into TV sets or in digital tuner set top boxes. There are around 100 million households in the US, so that is a penetration of about 1%. Many deceptive statistics were presented at the conference to make the rate of adoption appear to be much larger than it actually is.
Of the 9 million advanced television sets sold in the US, most are used as high-quality TV sets or DVD home theatre viewers. There is some HDTV content available via digital broadcast and via digital cable, but the current HDTV audience is very small. The leading audience measurement company, Nielsen Media Research, does not report HDTV viewership because it is too small to count.
There is increasing confidence that there will be a transition from conventional television to HDTV, but there is still some doubt about its success, and it is impossible to predict when it will occur. The FCC wants to halt analog broadcasting and allow that spectrum to be reassigned for new wireless applications. It cannot do this until consumers have accepted the new system. Suggested dates have been 2006, 2009, 2012, and much later. A principle issue is that consumers have invested an enormous amount of money in conventional TV sets (most homes own several TV sets) which go dark after the transition to HDTV. The broadcast systems are not compatible in the way that NTSC Color is compatible with NTSC Monochrome. (Fortunely, HDTV sets are backward compatible.)
The current suggestion is to turn off the analog system when HDTV has 85% penetration. It is likely that the 15% of households suddenly without television will be angry and want to take political action. It is suggested that converters will be offered to people for free, but there was no good idea for how to pay for that. The 4:3 Legacy makes the transition very difficult.
There is considerable confusion around HDTV. Most HDTV sets today are sold as advanced conventional TV sets. These sets are mostly not used to view HDTV broadcasts. Most consumers of advanced TV sets do not know for sure if their sets are HDTV compatible, or are just wide, or flat, or digital. Even CEA's statistic of 1.2M digital tuners confuses the fact that a digital receiver is not necessarily an HDTV receiver. Consumers are buying high quality TV sets that happen to also play HDTV. Most consumers are not buying HDTV for itself.
Many consumers are afraid of HDTV. I call this The Microsoft Effect. They fear that the new kind of television will be too difficult to use, or will be very expensive with lots of unexpected fees and additional required purchases. For example, digital broadcasting requires a new antenna. In some markets, there are multiple digital broadcast towers, so consumers need steerable antennas (which are very unpleasant to use) or multiple antennas. The short life and high cost of plasma displays (which are very popular) will ultimately hurt the reputation of HDTV, because many people think that HDTV and plasma display are the same thing.
Consumers enjoy the instant-on simplicity of analog TV. It is important for the equipment makers to produce HDTV systems that are very easy to set up and operate. Price reductions are going to be critical in driving mass acceptance of HDTV. High quality TV sets are making up an increasing share of the TV set market. This makes sense because TV sets are very reliable and most homes already have several. The best reason to buy a new one is for a significantly better viewing experience (home theatre).
Broadcasters were given digital channels for HDTV service. The current rules allow them to multicast, transmitting multiple compressed programs. They downrez the program material, so the programs are no longer HDTV quality. Cable companies are allowed to downrez the HDTV signals that they obtain from broadcasters, delivering a sub-HDTV program. In some cases, broadcasters are using Retransmission Consent rules to prevent cable companies from carrying the HDTV signals. This is all very bad for consumers.
ATSC is very important. There is now a DCR (Digital Cable Ready) standard approved by the FCC, which will allow digital sets to connect directly to cable systems without a set top box. All mechanisms involving the relationship between the cable company and the consumer are placed in a PCMCIA card which is provided by the local cable system operator. This system is called Plug-and-Play. There is a Plug-and-Play II design effort going on now which is intended to provide two-way service. This process already involves 90 companies and is very complicated.
The FCC may also be producing new rules this year in the area of digital rights management. Hollywood has asked the FCC for a mechanism ("Broadcast Flag") to prevent certain uses of its programming. The FCC has been responsive. However, there are many in the industry who believe that restricting the much enjoyed Fair Use rights of home video (as spelled out by the Supreme Court in the Betamax case) will cause consumers to reject HDTV or slow down the adoption of HDTV. Public Knowledge.org is suing the FCC to prevent the new rule making. They believe that consumers will demand the same capabilities in the digital media that they value in the analog media.
Local device interconnect standards were not mentioned at the conference, but are likely to be very important. These include DVI and High Definition Multimedia Interface (HDMI.org).
HDTV is extremely important to the United States. The FCC is committed to its adoption, and has compelled the industries that it regulates, broadcasting and cable, to participate. These industries were reluctant because HDTV increases their costs, but does not increase their audience or profit potential.
The basic transmission standards are in place. There is now some HDTV programming available, but HDTV sets are mostly sold for the home theatre application, which requires the highest quality audio and video. As prices come down, the home theatre market segment grows. Eventually, these sets will be used as HDTV receivers.
There was no mention at the conference of home HDTV recording and HD-DVD, but these will be critical in driving HDTV into the mainstream.