Cable's Got an Idea

…That broadcasters should really think about doing, too
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There was one story out of last week's NCTA convention of which all broadcasters should be aware. You can read all about in the tech section on page 22. But here it is again in a nutshell (or two).

Cable operators led by Comcast are toying with the idea of an all-digital cable system so they can take full advantage of the marvelous efficiency of new technology. In the same bandwidth needed to transmit one analog TV channel, they can transmit several digital TV channels. So an all-digital system means more TV channels—maybe 500 more—and more room for high-speed data, telephony and other moneymaking stuff. Digital equals more.

It's an all-or-nothing deal. If the cable system switches to the all-digital mode, every last subscriber has to be equipped with some kind of digital-to-analog converter because TV sets are analog.

That's the rub. Cable operators don't want to install expensive set-tops to convert the signals unless they know they will be able to defray the cost by charging extra for the digital signals or more for HBO, VOD or something. A lot of cable subscribers don't want to pay for extras, and many don't want a set-top box in the house under any condition. It clashes with the simulated-walnut veneer of their 20-year-old Zenith, or it takes up a warm spot reserved for the cat. Whatever. "Cable" and "charges" are two words American consumers hate when used next to each other.

But suppose someone came up with a device that converts all digital signals to analog, is small and unobtrusive, and is cheap enough that operators could buy and install them by the millions. That's what the cable operators are asking for, and the vendors seem to be responding.

Pace Micro Technology Americas, for instance, showed at its NCTA booth a D-to-A converter with two outputs (one for the TV, one for the VCR) that is small enough that it would rattle around inside my big coffee mug. The device on display didn't work, but, if some operator would commit to buying a huge quantity, Pace executives say they could get chips developed and sell the devices for just $69 a pop.

So thanks to Pace, Motorola and others, cable operators can now seriously consider moving to the all-digital platform and reaping the spectrum awards.

Why should broadcasters care?

Two reasons. The first is that the technology is applicable to broadcast. The Pace executives say they can build D-to-A converters for broadcast as easily and for about the same price as they can build them for cable. So the converters could speed broadcasters' transition to digital. Remember, the transition ends when 85% of TV homes have the capability to receive broadcasters' digital signals. That day comes sooner if the market is flooded with cheap D-to-A converters.

Broadcasters can go ahead and multicast digital signals with some confidence that they can be received on every TV set, if the broadcasters can figure out how to pay for and market the converters. Even at $69, the converters are not cheap when you are talking about equipping millions of sets.

An FCC official I met at the Pace booth suggests that one way to pay for them would be to configure them so that they display a five-second ad or promo every time they are turned on. Or how about rigging them to default to a certain channel when they are turned off? So, even if I go to bed with Letterman, I always awake with Katie. That has to be worth something to the NBC station in town.

The other reason broadcasters should care about the all-digital system is that even the prospect of it strengthens their digital–must-carry argument.

Which, frankly, could stand a boost. Before anybody who will listen in Washington, broadcasters argue that the government should require cable systems to carry everything the broadcasters air over their digital channels, even if it's just six or seven standard-definition TV channels.

Cable is, of course, pushing back. It wants to limit its must-carry obligation to just one channel per broadcast station. In his state-of-the-industry address last week, NCTA President Robert Sachs argued that cable simply can't accommodate all the channels broadcasters would have them carry. "So, in Chicago, for instance, where there are 17 local TV stations, cable systems could be required to carry up to 102 digital broadcast channels if the broadcast industry gets its way. "

In an analog world, Sachs is right: 102 channels is a load, and perhaps unreasonable. But in an all-digital world, it's but a drop in the spectrum bucket. And it's just what broadcasters need.

Jessell may be reached at hjessell@reedbusiness.com

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