After years of hype,, with its enhanced picture quality and superior sound, is finally becoming a reality. Consumers are starting to buy new HDTV sets in droves. Providing those people with more than one channel of HDTV programming could become a key selling point for the .
"There's been a lot of talk about integrating all kinds of interactive features into TV," said Rick Thompson, a senior analyst at Heavy Reading, an industry analyst group based in New York City. "But in the short term, the biggest differentiator will be who has the best content package, and part of that will be how much HDTV you have."
Phone and cable companies realize the importance of HDTV. But some providers may be in a better position than others to handle the increased demand for HDTV channels, which will eat up loads of bandwidth.
The cable industry leads the U.S. market in HDTV subscribers, with about 5.5 million of the 7 million households signed up at the end of 2005, according to Leichtman Research Group. Patrick Esser, president of Cox Communications, said the cable company has seen HDTV demand build in the last six months, with 20,000 to 30,000 new customers every month.
Experts say that making sure networks keep up with HDTV demand is important, because it may help sway some consumers' buying decisions in the future.
"People today aren't choosing their TV service provider because of their HDTV offering," said Bruce Leichtman, principal analyst at Leichtman Research Group. "But they probably wouldn't go with a new provider who doesn't at least match or offer more than what they are already getting."
HDTV in the American home
A big reason for the increased demand is that there are more HDTV-capable sets out there. About 16.2 million U.S. homes had at least one at the beginning of 2006, and that tally has likely grown to about 19 million since then, according to Leichtman Research Group.
That rise in popularity is being driven by more affordable models. At Christmastime last year, the average price of an HDTV was $1,600, but people were able to get them for as little as $500. As prices continue to drop and people replace old TVs with newer ones, the number of homes with at least one HDTV set is expected to jump to 65 million by 2010.
In addition, a significant percentage of HDTV households have more than one set. Leichtman said 11 percent of people surveyed at the end of 2005 said they had more than one, and 18 percent said they were planning to buy another within the year.
For phone companies and cable operators, these are signs that subscribers will want to view more than one HDTV channel at once, which could put a strain on some networks.
"People with HDTVs will buy more than one over time," Leichtman said. "So if you are offering an HDTV service at all, you've got to be able to serve multiple TVs."
Poised to provide
Right now, in terms of network architecture, Verizon Communications is best equipped to deliver multiple HDTV streams. The phone company is building a network that , giving people almost limitless bandwidth capacity. Adding more HDTV streams over this infrastructure shouldn't be an issue.
But Verizon's fiber network is expensive to build and will end up costing the company as much as $20 billion, some analysts have estimated. In addition, it won't be able to reach every home within its range anytime soon. It has said it plans to reach 60 percent, or 18 million customers, within the next five years. Last year, it installed fiber in 3 million homes and expects to reach another 3 million by the end of 2006.
AT&T, which plans to officially begin offering commercial TV service this summer, has taken a . It has put fiber further into neighborhoods and is using a technology called Very High Speed Digital Subscriber Line, or VDSL, to deliver up to 25Mbps of bandwidth into homes over its existing copper lines.
But when doing the math, it's easy to see that AT&T's initial service plans will have it bumping up against its bandwidth ceiling. The carrier has said it will provide one HDTV channel, which eats up about 8Mbps each stream, using MPEG-4 compression technology. But on top of this, it is promising up to three standard-definition channels (roughly 2Mbps to 3Mbps of bandwidth per stream) plus at least 6Mbps of high-speed Internet access, for every home. If a household is consuming all these services at full capacity, it is using up 23Mbps.
AT&T executives say they are confident that the carrier will have enough bandwidth to serve plenty of HDTV content in the. They also argue that most people won't use all kinds of services at the same time, and that when more bandwidth is needed, the company will upgrade its network to newer DSL technology. Still, the company is not offering HDTV in its controlled release of the service in San Antonio.
"I can deliver HDTV today, no problem," said Christopher Rice, executive vice president at AT&T. "Even if you assume that people will go to 3 HDTVs, we can double capacity to 45Mbps and 50Mbps by using VDSL2+ bonding technology."
AT&T won't be the only company that needs to upgrade its network to keep pace with HDTV demand. Cable operators will also have to do some building. These companies broadcast TV signals across their networks to all subscribers, and when people click on a channel, it tunes that particular stream of video. With higher-capacity HDTV streams traveling over this network alongside analog streams, cable networks are nearly tapped out.
But Cox's Esser said cable companies have several options for tapping deeper into their existing infrastructure to increase the volume.
Esser said that his company, which offers nine HDTV channels today, is upgrading and re-spacing electronics on its network to increase bandwidth. Cox and other cable operators are also trying to encourage customers to switch to digital cable from analog TV, which eats significantly more capacity, he said.
And finally, cable companies are also looking into a technology called "switched digital," which mimics Internet Protocol. Instead of broadcasting every TV signal throughout the entire network, "switched digital" allows only the channels currently being watched to be sent to customers' homes along the coaxial cable.
"We've known for a long time that we are going to need more capacity on the network," he said. "And we've already been planning for it for a long time."