Digital video encoder maker EGT finds itself in the enviable position of working with a wide range of cable operators. Comcast, Cox, Time Warner Cable and Adelphia are all on the company’s customer list, using EGT’s gear to compress channels into as small of a slice of bandwidth as possible to open up room for more services. Greg Nicholson, EGT CEO, discussed the market with B&C HD Update.
Q. Cable operators are digital simulcasting to reclaim bandwidth for digital services. Is HD a driver for that move?
A. Probably 80 to 90% of U.S. cable operators are now digital so they can already handle HD. But it comes through at about 18 Mbps and that is three or four times the bandwidth requirement of an SD channel. So the real impact is as they allocate more HD they get a bandwidth crunch that makes low bit-rate SD encoders more important.
Q. With companies like MTV and NatGeo launching HD services they find there isn’t any room for carriage. But the satellite operators are using h.264 AVC MPEG4 to deliver more HD. How do cable operators keep up?
A. The way they’ll deal with it is switched broadcast. They’ll build their fiber network up to the edge and serve a limited number of homes off of a single node. And there’s an architectural way of sending only one signal to the set-top box or TV.
Q. When will the cable operators get to that point?
A. Well, the first step is digital simulcast and companies like Comcast are way ahead in that. And Time Warner and Cox will do the majority of their conversions this year. After that they’ll be able to reduce their analog tier and reclaim bandwidth, giving them plenty of bandwidth for the first wave of HD services. But when everything turns HD and there is a dual-cast SD and HD plant they’ll have to look at the switched infrastructure.
Q. Are there any other options?
A. One I like is allocating the bandwidth in four tiers and marketing your services accordingly. The first is pure analog and lifeline services for people who refuse to install a set-top box or a new TV. Then there are digital broadcasts of popular channels in both SD and HD and that will be a big chunk of the spectrum. And then there is a switched area for the digital channels, either SD or HD, that aren’t that popular. Last is an advanced services tier with data, phone and, someday, two-way things like videoconferencing and videomail.
Q. Will the analog tier actually ever go away?
A. At some point the operators will have to make a calculation as to when it’s worth putting in a $75 box into those analog homes to turn analog off.
Q. Does MPEG4 make sense for cable?
A. Well they have billions of dollars of MPEG2 equipment in the field so it doesn’t make sense for them now. There’s a lot of talk about it among the technical community but I don’t think it happens for another five years. It’s not time right now because the cable operators are all about cash flow and high return on investments and competing with satellite or telephony services.