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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here

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To: MikeM54321 who wrote (6952)5/23/2000 4:39:00 PM
From: DenverTechie  Read Replies (1) of 12823
 
Mike, the role of HDTV in cable land is a hotly debated topic at every major MSO today.

In lml's response to your question of service priorities, I think they've got this pretty much pegged. As an addendum to that post, I'd like to add some additional perspective to the mix, although some of this might seem pretty obvious to the casual observer.

That is, that the MSO GM is still totally business case oriented, and yes, biased to that which uses the least bandwidth to provide service and provides the greatest potential revenue. Too simple? You could say that, but it takes many forms, especially when dealing with HDTV.

Because this issue gets wrapped up with the whole "must-carry" and "retransmission consent" rulings of the Cable Act of 1992. When broadcasters add HDTV (or even normal DTV for that matter) signals to their broadcast networks, will cable be forced to carry the signals in the 2 formats like they are required to carry the standard format today? Will DBS have to do the same thing? It all comes down to financial incentive.

As an example, HBO has announced they will begin transmitting certain programs in HDTV in the near future. Every major MSO has in turn announced they will make these programs available in HDTV format, and you can watch it on your cable system if you are one of the lucky few with an HDTV set and decoder in your home. This is possible because HBO will compensate the cable operator for providing this format of signal on its system.

But this economic model breaks down for broadcast networks who just say "you must carry me on your cable network in HDTV format because the government says so" will be forced to eat up valuable spectrum to provide the service, as lml so properly points out already. Now would you as a cable subscriber be willing to pay a premium to watch HDTV at your house? Or would you take the more common opinion that it should just be included in the current bill because it is the same channel in a different format?

So, the short answer to your question is that cable telephony is definitely on the front burner at MSOs because the business model works and is well known by now. And HDTV is on the back burner because the business model is still unknown and definitely iffy as to who pays for what, not to mention eating up bandwidth that could be used for paying services. And in the end, this is what the debate comes down to. Cost and revenue, and the very real understanding that HDTV is still just another form of video distribution, unlike telephony and HSD which provide revenue streams in the convergent telecommunications structure of the vaunted "triple play" - the ability to provide voice, video, and data on a single platform and bundle the services to the end user.
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