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Technology Stocks : C-Cube
CUBE 37.23-0.3%Nov 28 9:30 AM EST

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To: BillyG who wrote (28289)1/20/1998 2:37:00 PM
From: John Rieman  Read Replies (3) of 50808
 
Malone's been talking with Gates. Lower quality/higher profit digital cable...........................................

TCI Embraces Microsoft's `HD0' Approach to HDTV

By FRED DAWSON

Tele-Communications Inc., with a decision to embrace Microsoft Corp.'s "HD0" approach to high-definition television, has taken a stand on what promises to be a divisive issue within cable ranks.

Speaking to reporters on Jan. 10, TCI CEO John Malone said his company would transmit high-end signals in the 480 progressive and 720 progressive/24-frame formats advocated by Microsoft CEO Bill Gates, even though many interests pursuing digital TV view these formats as below the threshold of true HDTV.

Malone said the advanced set-top boxes to be equipped with the Windows CE operating system would be able to translate high-definition feeds in the HD0 format to analog for display on standard sets, thereby "solving ... the compatibility issue between HD standards and standard TV sets."

The ability to perform this conversion is "particularly important to those people trying to develop high-definition programming which has a different content time schedule or features than their over-the-air signals," Malone said. "This could turn out to be a very positive aspect for the broadcasting industry as they try to make economic sense out of their entry into high-definition."

TCI, by downconverting higher resolution signals, such as 1080 interlace, to 480P, will greatly enhance the number of broadcast and satellite HDTV signals it can deliver over its networks. Depending on the level of modulation used, the difference could be as much as 4:1.

The HD0 scheme also accommodates the 720P/24-frame format, which takes advantage of the lower frame rate of film to deliver movies at picture quality levels that are comparable to the high-end HDTV video formats. This format consumes more bandwidth than 480P but not nearly as much as full HDTV.

But an unresolved question in the minds of many cable operators is whether an HD0 480P signal displayed on HDTV sets will meet the quality expectations of viewers.

"Many cable people are still trying to figure this out," said Richard Prodan, chief technical officer at Cable Television Laboratories.

"Some people are saying the mass market for HDTV isn't for the receivers that display the highest level format, so they shouldn't carry signals with more quality than these [lower cost] receivers show," Prodan said. "I think that's potentially a little bit dangerous because you're presupposing what the high-end guy will accept in the early phases when the average guy isn't driving the market."

In fact, Prodan noted, a 480P display over a 16-by-9 aspect ratio offers fewer pixels per line than it does over a 4-by-3 screen, which means a viewer will see a drop in quality when changing channels from a broadcast digital picture delivered in wide-screen format to one using the standard aspect ratio. Such variations from broadcaster to broadcaster could be commonplace, owing to the lack of consensus on approaches to digital within that industry.

"If the customer who has bought an HDTV set sees the high-def picture is lower resolution than the SDTV [standard definition], how is he going to react?" Prodan asked.

After a visit to the consumer electronics show earlier this month, Prodan said it was clear that the consumer electronics manufacturers are not ready to "bet the ranch" on any one format.

"The smart guys are saying that with no consensus in the marketplace to go on, they'd better be ready to deliver product in different price ranges at different levels of quality," he said.

Cable clearly doesn't want to consume more bandwidth than necessary to meet consumer expectations for high-definition performance, noted Alex Best, chief technical officer at Cox Communications Inc. But cable doesn't want to disappoint the customer either, he said.

"It's not clear that, if I could sit you in front of a digital receiver and show you anywhere from 480 interlace all the way to 720 progressive or 1080 interlace that you could tell me when you consider the picture to be good enough to be HDTV," Best said. "There are many people who say the digital formats at the low end are good enough, but we don't know that for a certainty."

"No one knows how this is going to unfold, but it's incumbent on the broadcasters and cable operators to reduce consumer confusion over what is HDTV and what is SDTV," said John Taylor, vice president for corporate communications at Zenith Electronics Corp.

"STDV on a small screen may not look that different than true HDTV, but it's the extremely large screens where the benefits of HDTV will be obvious," Taylor said.

The Consumer Electronics Manufacturers Association has drawn a line where 480P does not qualify as HDTV. Zenith, by initially delivering sets that receive signals in multiple formats but display them at the highest level of 1080I, is betting that the early market force will be high-end users looking for maximum quality.

Microsoft officials took issue with assertions that 480P undershoots market expectations for high quality.

Gates, declaring a large-screen display of 480P video that came on during his speech at the Consumer Electronics Show "sure looks good," said TCI's ability to deliver 480P through its set-top boxes "is a major milestone for TV."

"Everyone is going to form their own opinions, but we've found in testing viewer responses that the overwhelming difference is between analog and digital," said Mike Conte, group manager for digital TV at Microsoft. "If you ask them, they'll tell you they see some difference between 480 and 1080, but they'll tell you that either one is a remarkable improvement over what they're used to seeing."

Such reactions suggest the consumer response for digital sets priced slightly higher than today's premium TV sets could be very strong, creating a market big enough to drive the transition to digital programming, Conte argued.

"480P may represent the real sweet spot in the market for some time to come," he added.

But does cable want to bet that's the way it will go when so much, including the parameters of HDTV, must-carry and potential transmission deals with broadcasters, remains to be decided? Many cable interests are hoping that their ability to accommodate multiple format requirements will lead to business arrangements with broadcasters that will obviate the need for stringent must-carry rules in the digital domain, Prodan noted.

"We don't want to become yet another faction in these religious wars," Prodan said.
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