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Digital TV, data services explored at show

Executives head to next week's National Association of Broadcasters trade show hoping to find answers to a vexing dilemma: What to do about digital television?

Many broadcast industry executives head to Las Vegas for next week's National Association of Broadcasters trade show hoping to find answers to a vexing dilemma: What to do about digital television?

Whether broadcasters define it as high-definition (HDTV) programming--prettier pictures--or something more is open to debate, but quite a few third parties have already placed their bets.

Affiliates of the four major networks--ABC, NBC, CBS, and Fox--are slated to begin digital broadcasts in America's top 30 markets by November 1999. By 2006, the FCC has mandated that no more analog television signals be broadcast.

Broadcasters don't expect to have much more than a few hours of HDTV programming per day because of the added cost of producing such material, and thanks to prices ranging from $6,000 to $10,000, there aren't many HDTVs in homes to receive the signals anyway. But several lower-quality channels delivering new interactive data services could take the place of any one HDTV channel and deliver revenue, and therein lies the question.

Analysts and industry insiders alike say that network affiliates aren't really experienced with setting themselves up to be data service providers, even though most are intrigued by the opportunity. The possibilities include better tracking of which ads viewers watch, becoming portals that aggregate Web content and broadcast it to PCs, or even reselling a portion of their airwaves over to third-party service providers.

Undaunted by the industry's uncertain direction, all sorts of companies will assemble in Las Vegas to pitch everything from content production software to infrastructure hardware to receivers that consumers will need to access the services broadcasters finally decide to make available.

"Broadcasters will soon discover an interesting business opportunity, because the spectrum they own is capable of carrying not just TV programming but all sorts of enhanced data services and data not even correlated with video," said Clint Chao, vice president of marketing for Skystream. Skystream produces networking infrastructure equipment that blends digital video and audio signals with high-speed IP or Internet data for transmission over a broadband network such as a digital terrestrial system.

The enhanced services Chao speaks of can be used to finance the expensive digital system upgrades and new antenna towers that can cost anywhere between $2 million and $5 million for each local affiliate of the big four broadcasters. The cost goes up to between $8 million and $10 million if the local station wants to produce its own HDTV programming, such as a newscast.

While Skystream is aiming to sell hardware for data transmission, companies such as Hauppage will be demonstrating products that can receive data from a DTV broadcast. Such firms will show DTV receiver cards that plug into PCs and are expected to sell for between $200 to $300, according to industry analysts.

The significance of these products is that a low-cost PC combined with one of these cards--which only a few months ago were expected to cost upwards of $800 or $900--could translate into a much larger viewership for broadcasters than that of digital televisions alone.

Another company, going by the somewhat cheeky name of The Fantastic Corporation, is aiming at the market for content production tools. Fantastic provides software tools that enable broadcasters to take a variety of content types, from video and audio along to Web pages, and automate and manage the sending of that information over any kind of broadband network--including digital terrestrial.

Next week, the company will establish a joint venture with British Telecom in which BT will use Fantastic's software to broadcast multimedia content to corporations, according to Peter Ohnemus, president and CEO of the company. BT will take an equity stake in Fantastic, joining other equity partners such as Intel.

If a broadcaster doesn't want to delve whole hog into doing enhanced television services by itself, OpenTV and Echostar will be demonstrating live broadcasts to satellite set-top boxes that enable viewers to tune in extra information about shows via remote control, and even order up associated merchandise, said Mitch Berman, senior vice president of marketing and operations for OpenTV.

Berman said the show is an opportunity for broadcasters to "offer enhanced services today, instead of waiting for two-way broadband (i.e., cable modem service)" or installing their own infrastructure. Both companies will be talking to the networks and their local affiliates about creating new content to show to Echostar's customers along with their regular programming and--more importantly--how to increase ad dollars.