***DTV Explosion?
By Amanda Rogos
(January 19)
CEA President and CEO Gary Shapiro has described DTV product
sales as exploding with approximately 100,000 sets sold in 1999.
Ralph Justice, another member of the CEA has estimated that this
year sales of DTVs will be 600,000 and in 2001-2002 they will hit
1% penetration. What the CEA did not openly offer was the fact
that in 1999, only 10,000 decoders were sold – which leads us to
believe that not that many people were watching digital
programming with their fancy new sets.
At CES, during a DTV status session, the WAVE Report questioned
how many of the 1999 DTV sets were integrated sets vs. DTV-ready.
Speakers acted confused and stated that all sets sold had
decoders. This caused a commotion in the room and we were
approached by a CEA PR person claiming that their retailers were
quoting 10% DTV integrated sales. Another audience member turned
and said he had heard from another session that the number was
more like 2%.
This brought up another topic; did the consumers buying these
sets understand the potential problems with compatibility? Did
they know that future cable boxes might not be compatible until
an interface solution can be agreed upon? Did they know that
because of Sinclair's petition (WAVE #9095 and #9111) standards
were being questioned by some industry segments? The consensus
seemed to be the belief that consumers were not aware of the
situation. Many of the speakers voiced concern about this, and
about the future, which could be affected by consumer confusion,
lower confidence levels, and sales.
Then there was FCC (Federal Communication Commission) Chairman
Kennard's luncheon speech in which he chastised the cable and
consumer electronics (CE) and programming industries for dragging
their feet with delivery platform standards and copyright
protection. In an unusually blunt appearance, Kennard offered
three elements in the dilemma for an interactive personal and
digital TV (IPTV and DTV).
The first was economic and technological barriers. These are to
be expected, and are numerous. Their progress has been slowed
because of the proliferation of industries involved with
competing architectures, products, and format. This issue has two
specific disputes:
1. The consumer electronics and cable industries cannot agree on
the definition of cable-ready – whether every set should have a
1394 connector.
2. There is also disagreement on how program information will be
available on CE devices, which affects the programming of
electronic programming guides (EPG).
This has caused incompatibilities, which was the second issue.
The market bottlenecks that have occurred cause confusion among
buyers and effectively block consumer purchases. Lastly Kennard
offered an ultimatum. He stated that where the market does not
promote consumer welfare, the Commission must step in – and
stated that the "hands-off" phase was about to end.
This is not a new concern at the Commission. In 1994 the FCC
began asking the industry to consider standards for digital
television and cable compatibility, declining to act only when a
1995 solution was promised. In August of 1998 the Commission
again pleaded with industry leaders, in particular for an
agreement on a 1394 interface standard and was promised cable-
ready, content protected sets by November. In 1999 the Commission
began to work with the industry, setting up a group from the
NCTA, CEA, OpenCable and an FCC engineer to resolve the issues.
Now in 2000 the Commission has had enough. Kennard has directed
the FCC staff to draft a set of proposed rules for digital TV
compatibility standards. These will be used if the industry
cannot come to an agreement by April of this year.
Even with a conclusion to the compatibility standards bottleneck,
will DTV have enough programming to sell sets? A representative
from Time Warner has said that they are not planning any new
channels because typically early adopters watch more pay TV
channels. Let these channels be the leaders in digital
programming and other cable networks will follow after there is
consumer acceptance. We have already questioned whether there
will be enough viewers for a complete conversion by the FCC
deadline in 2006 (WAVE #9114).
Wave Issue 2004 1/25/00 Article 2-01