Wednesday, December 26, 2007

Cable's Lack Of Interest In HDTV

2007 was the year the government, broadcasters, and equipment manufacturers finally began to get serious about the February, 2009 transition to digital television.

The first step was setting the date of February 17, 2009 in essential stone for the transition, with the Congress fending off a last attempt to delay the date early in the year.

The number of cheap analog-only TV's available for sale has dropped at the retail level, with more digital-ready sets at the ready. And the retail push for HDTV has been generating more interest in large-size screens good for movies and sports programs.

Strangely on the sidelines have been most of America's Cable companies, who have taken the position that they will be the last to the HDTV table in any wholesale sense. Cable has apparently decided it will be more profitable to continue to limit video capacity and wait for the final transition than add capacity, especially to aid broadcasters.

Cable has instead concentrated much of its development in the area of Internet access and telephone service, which require less ongoing investment and no programming negotiations, with cable serving as little more than a bandwidth provider.

Cable's seeming lack of interest in HDTV has opened up a major window for satellite television, which not long ago was teetering on the brink of disaster. Many of cable's most profitable customers have left for the dish, even with its numerous weather and service problems, in order to try and get a broader range of high-definition programming.

Cable's apparent willingness to let these customers go is a strange one, but a likely strategy is becoming apparent in doing so.

In largely ignoring HDTV, Cable can maintain its present amounts of video bandwidth and limit the development of additional channels of programming that are viable enough to either compete for advertising or demand significant rights fees.

As America's cable companies continue to own part or all of dozens of the most popular cable networks, limiting video bandwidth protects cable-owned network audiences from dilution by additional significant program sources.

By not carrying both the HDTV and analog signals of broadcasters, cable also has inhibited the development of local broadcasting's HDTV audience, as well as any additional revenues broadcasters have hoped to develop from using their FCC assigned bandwidth in additional ways, including the provision of Internet access.

This has left broadcasters absorbing many millions of dollars of costs at each station with essentially no growth in revenue from digital television to support it. Which in turn helps local cable compete better for advertising against weaker broadcasters.

Cable also sees an opportunity to drive penetration into the last of America's broadcast-only households, as analog-only sets become dark in February, 2009. After that date they will either require a converter, or a cable box. Cable will be more than happy to supply the latter, and you can expect a major push to do so in 2008.

In 1997, the U.S. Supreme Court held in the 5-4 decision in "Turner Broadcasting System vs. FCC" that cable functioned in many respects as a vertically integrated monopoly. I served as the lead expert witness for the winning government and broadcasters in that case, and generated more than 100,000 pages of original research.

In watching Cable handle the transition to digital television, it's becoming apparent that the same thinking present ten years ago is still largely controlling the cable industry today. Cable wants to continue to control programming access to America's homes while expanding its reach into non-video markets.

This behavior portends yet another round of regulatory and judicial fights, which the Cable industry likely thinks it can win in this go-round, as the Court has become even more conservative.

Tom Meek is a computer and media consultant working with businesses and individuals on high-tech needs. Another Day In Cyberville is published weekly in print and online via The Gainesville Voice, a weekly publication of The New York Times Regional Newspaper Group. You can reach Tom Meek at adayincyberville@gmail.com.

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