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Sorting out the digital TV mess

Amid a litany of disjointed announcements this week, sorting out what digital television means is a challenge in its own right.

LAS VEGAS--A litany of disjointed announcements is generating a cacophonic buzz around the impending appearance of digital TV and the hardware needed to view it at the National Association of Broadcasters convention here this week. As a result, sorting out what this means to the future of the PC and TV is a challenge in its own right.

The upshot is that the broad array of technology initiatives Digital TV chart being generated by a diverse group of companies from different industries with different agendas has complicated the arrival of the digital era to television, to say the least.

Nonetheless, in spite of the confusing issues surrounding its deployment, consumers who see high definition digital TV have been enthralled by the technology.

Alan McCollough, president and chief operating officer of the national electronics retail chain Circuit City, said at a panel discussion today that the nation's first broadcast of a baseball game in high definition display formats generated large crowds and an unexpectedly high level of interest.

Users will be able to receive a combination of high quality video and audio that isn't possible with today's analog TVs or most personal computers. But that isn't the only selling point of the digital TV era. Broadcasters may also focus on broadcasting local content such as a dedicated traffic channel or other special interest programming with the extra channel capacity that's offered with digital television, according to a report from Maryland-based Arlen Communications.

Computer-like interactivity will also be major enticement. The high-quality picture can be combined with data for interactive services like shopping and programs-cum-data-content that can be served through new digital TVs, PCs, and other computer-based information appliances. Early examples of these combined services already exist in the form of devices such as Microsoft's WebTV--without the high definition programming from broadcasters.

On the PC side, Microsoft and Intel are also gearing up to make TV viewing a standard feature on PCs with the coming release of Microsoft's Windows 98 operating system. Apple Computer is also reportedly working on a device for interactive TV.

Even as the deadline for the transmission of digital transmission looms, though, many questions for consumers remain unanswered.

The public will have a variety of devices from which to view new digital programming, and broadcasters will be sending content in a variety of formats at a variety of quality levels. But before they can decide on what devices to buy, consumers must live in the right part of the country--either that or purchase service from a direct broadcast satellite (DBS) provider that will provide high-definition programming.

Initially, major affiliates of networks such as ABC and NBC will have to transmit digital signals in the ten largest markets by May 1, 1999. Analysts say this represents a potential market of 50 million out of the total 100 million television viewers. Smaller markets will need to be online with digital TV by November of 1999, with all remaining commercial stations converted by the year 2002.

In these areas, consumers will have the option of buying new digital televisions, most of which will cost in the $3,000-to-$5,000 range intially. By virtue of the price of new sets, digital TVs aren't likely to be sold in high volumes at first. Still, industry observers think there is already a significant demand for the new devices.

"A lot a manufacturers will rush to be first," said Gary Shapiro, president of the Consumer Electronics Manufacturing Association. "Retailers have so many [preliminary] orders, manufacturers are rushing" to build sets, he noted. Companies such as Panasonic and Sony have previously said they expect to have systems available sometime this fall, though that date could slip if there is not enough digital TV programming at that time.

This was a serious problem that Japan faced when domestic manufacturers first started to sell high-definition TVs in the latter half of the 1980s: the products were available but there was almost no programming in Japan.

The other obstacle is pricing but this should resolve itself relatively quickly. Shapiro predicts that a mass market for new high-definition TV sets priced between $300 and $400 will arrive after the turn of the century.

An interesting twist on the emergence of this new market is that, in addition to the expected crowd of consumer electronic giants, computer companies such Microsoft, Intel, and Compaq Computer are also competing fiercely to drive the market and potential buyers toward their vision.

In fact, consumer electronics manufacturers may be beaten to the punch by PC companies, especially if the computer industry can manufacture lower-cost receivers. Cutting-edge PC users--via plug-in circuit boards--and some manufacturers will be adding digital television features to their PCs before the end of the year.

Intel, for instance, is working with Zenith on digital TV receiver cards that would plug in to an open slot on a PC and receive any digital TV transmission. Multiple cards for each format are now needed, each of which cost around $500--a situation that doesn't lend itself well to the mass market.

"That's well beyond the price point needed for volume deployment," said Ron Whittier, senior vice president with Intel's content group in a presentation here this week. He said that the cards should cost around $200 to $300 once volume production is reached but did not say when that might occur.

Still, the potential still exists for PCs to be the first volume platform for digital television, a matter that may influence the use of computer-friendly digital TV formats.

Cable companies, of course, will also participate. Companies such as Telecommunications Incorporated and Time Warner Cable are working on set-top boxes capable of providing interactive services as well as high-definition TV. Some markets will have these devices available by midyear, with wider availability expected in 1999. However, it is unclear whether signals from broadcasters will get passed through to the cable networks.

For digital television to be successful, cable companies must pass through the digital signal in whatever format the broadcasters send it in, Circuit City's McCoullough said. "Otherwise, people will have to go back on their roofs to install antennas," he said.