Digital TV: Satellite Vs. Cable
By Carolyn Whelan
New York--Digital TV goes live on Nov. 1. Want to be one of the first to see High Definition
Television (HDTV), at home? Better get a satellite dish, then, and an off-air antenna. That is
unless you're among the lucky pockets of population living in one of 24 metropolises blessed with
DTV this fall. Or residing in a few big cities where digital cable is currently being rolled out. Still,
only 10 percent of U.S. households currently have that capability. And whatever the pipeline, 70
percent of U.S. homes still won't have access to digital broadcasts by the end of next year.
Satellite is the only medium that provides immediate, ubiquitous coverage of digital television. A
flick on, nationwide footprint instantaneously. As such, the industry is hoping to beat cable and
broadcasters to the punch in the digital TV race.
"It's very exciting," said a satellite executive at last week's Skyforum in New York City. "Satellite
will jumpstart the arrival of digital television."
In the U.S., high bandwidth cables that pave the way for digital cable are the exception rather
than the rule. Among some 98 U.S. million homes, only about 83 million have been passed by
cable TV systems. Furthermore, just under 68 million households are actual subscribers, and a
mere 10 million are already equipped with two-way capabilities. All figures are from Cahners
In-Stat, unless otherwise noted.
But though satellite may lead the pack into the
digital century, cable, with its two-way
capabilities continues to be a formidable
contender.
In spite of its headstart and recent inroads
satellite has made into the cable subscriber
base (particularly big-spending, Joe six-pack
types), over the long term, analysts expect
digital cable to pull ahead, due to the many
applications that will be available to consumers
(see chart, p. 46).
Two-way interactivity, voice telephony,
high-speed data streaming, Internet access, and
of course the choice of hundreds of cable
channels, with, eventually, most of them
digital--not to mention video on demand, down
the line--are among applications that will be
available to digital cable subscribers.
Consequently, cable will have more
revenue-generating possibilities. "The U.S. market for local telephone access is $85 billion, so
there's some money to be made," said Gerry Kaufhold, a multimedia analyst at Cahners In-Stat.
"It's going to happen very slowly, but it will drive a lot of semiconductors, on a city by city
rollout."
The growth spells out big opportunity for chip makers, many of whom have set their sights on
supplying chips to OEMs for cable modem boxes. Both boxes use the same sorts of chips. Many
people confuse cable modems and digital cable, for that very reason (see box). But though cable
modems enable digital streaming on PCs (much of which may be generated by networks), they
can't receive digital broadcasts. Digital cable can.
For interactivity, many technologists prefer digital cable because it is wired and two-way. It also
provides more bandwidth to selected homes than any other source. The technology will deliver six
to ten times current compression rates versus two times for HDTV. Others are voting for cable
due to its off -the-air quality.
Other factors may impede the use of satellite for digital broadcasts, and, subsequently, deter
long-term buy-in to the technology as a medium for receiving digital content.
Since the HDTV signal takes up more bandwidth, satellite stations will initially offer only two (out
of several hundred) channels in high definition. However, the exception, Unity Motion, is going
online, 24 hours a day, 7 days a week, with 24 channels of HDTV programming, nationwide.
Another stumbling block is content. The only digital content available in the first 12 months of
HDTV will be movies, which are already in high definition with wide screen capabilities. But, since
most films are owned by Time Warner, which also happens to own several cable companies,
Time Warner could easily limit its supply of movies to satellite providers.
Still one more strike against satellite, over the long term, is a lack of access to network
programming. Last year the National Association of Broadcasters successfully sued satellite
providers, preventing them from using a satellite system to access programming from the big four
networks. Despite the fact that satellite viewers can surf several hundred channels, unless they buy
a local antenna or networks sign a waiver granting them access, viewers can't watch their favorite
weekly network episodes.
So who is going to win?
Technology issues aside, timing will be an enormous factor in the early rounds of selection. And
yet to be seen are the roles other technologies will play in delivering digital entertainment (see
sidebar). But by and large, early on, broadcasters, satellite and cable will dominate the mass
market.
Finally, satellite has its very low, 8 million subscribers, or 8 percent of households penetration rate
working against it.
And a few issues have yet to be resolved. Unanswered still is whether or not digital cable will be
able to carry all digital channels. Also, some say that in terms of bandwidth, three satellites can
match the throughput of high definition television. And, some broadcasters are leaning toward
satellite as a way to usurp control from cable operators.
Whatever wins out, OEMs should keep mid-1999 top of mind. That's when a digital TV product
becomes a viable product to sell at retail.
sumnet.com |
