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Industry Standoff Has Delayed Digital TV's Market Momentum

Television: Broadcasters, consumer electronics firms don't want to be the first to invest in it. But progress may be at hand.


Every day, nearly 200 television stations across the country pump out hour after hour of crystal-clear programming that virtually no one can watch.

This is the state of digital broadcasting, the biggest innovation in television since the introduction of color in 1953. Despite a federal mandate to switch to clearer, more vibrant digital broadcasts, fewer than one in 1,000 homes is equipped to tune in.

The main handicap for digital television has been a chicken-or-egg standoff between broadcasters and consumer electronics companies, a problem that probably will be at center stage at this week's National Assn. of Broadcasters convention in Las Vegas.

The broadcasters complain that there aren't enough homes with digital sets to justify spending the money on digital programs. The manufacturers counter that the masses won't buy new sets unless there's more programming.

Still, analysts and industry insiders say there are signs that the shift to digital TV is gaining momentum. Some key hurdles recently were removed, and important building blocks are settling into place.

"The momentum is coming in small puffs here and there," said analyst Larry Gerbrandt of Paul Kagan Associates, a media research firm. "The sails of the DTV ship are pretty much flapping in a light breeze."

Earlier this year, federal regulators finally ended the debate over how the digital channels should be transmitted, enabling broadcasters and set manufacturers to focus on and improve a single technology.

Long-awaited specifications for data broadcasting and signal security are starting to emerge. And TV producers are slowly warming to the idea of using digital cameras.

On the other hand, digital sets, which start at about $1,000, are still priced out of the average consumer's reach. The vast majority of cable and satellite operators still refuse to carry the broadcasters' digital channels. And most TV stations balk at spending the millions needed to create digital versions of their most popular offerings--local news and sports--because they don't see how to recover the investment.

In fact, some California stations are trimming the hours of their digital channels because of the cost of electricity, which one station engineer estimated at $7,000 a day. PBS affiliate KCET-TV cut back to eight hours of digital a day, and independent broadcaster KCAL-TV carries only its news, sports and prime-time shows on its digital channel.

Digital TV translates moving images into the ones and zeros of digital data. The basic version, known as standard definition, is crisp and free of ghosts and snow. The highest-quality version, called high-definition TV, or HDTV, delivers richly detailed wide-screen pictures and cinema-quality surround sound.

The Federal Communications Commission ordered broadcasters in 1997 to shift gradually to digital, loaning them a second channel with enough capacity to deliver one HDTV signal or multiple standard-definition programs. All commercial TV stations have to get their digital stations running by May 2002, and all public TV stations have to follow suit by May 2003.

Nine stations in the Los Angeles area have launched digital channels already, as have nearly 190 across the country. It's cost them upward of $2 million per station just to transmit a digital signal, not including any of the gear needed to produce their own digital shows.

By the end of 2000, set makers had shipped about 780,000 digital TVs and monitors to retailers, according to the Consumer Electronics Assn. But analyst Richard Doherty of Envisioneering, a technology research and consulting firm, estimated that two-thirds of those sets didn't have the digital receiver needed to tune in to the broadcasters' new channels. Instead, they were used mainly for watching DVDs.

With such a small potential audience, many local broadcasters say they see no reason to produce shows just for digital sets. Instead, they simply "upconvert" the programs on their analog channels into digital, generating a picture that's clearer but no more detailed or colorful.

Some of the networks, however, have decided to beef up their HDTV offerings in the hope of spurring the market for digital sets. CBS has led the way, using subsidies from three set manufacturers to deliver a prime-time lineup that's up to 80% HDTV.

"Just as a foundation point, you can't be analog when the whole rest of the world is digital," said Martin Franks, executive vice president of CBS. "So there is some considerable reason to go digital even if there wasn't much of a return on investment, just to preserve the asset."

ABC and Fox also have increased their HDTV output, although not to the extent that CBS has. "We are ramping up our HDTV production," ABC-TV President Alex Wallau said. "In our present negotiations for new shows, every negotiation . . . has an HDTV component."

Some of the top TV producers are starting to dabble in HDTV, although their ranks are divided.

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