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Cable TV

Updated July 2, 2006

Last year when I first wrote this article I said a lot is going on in the background, and you know what? -- a lot is still going on, just not very fast. For the most part, not much has changed.

A lot of people have confused the transition to digital television with cable TV's transition from analog to digital for delivery. Not the same.

For the most part, digital cable service is the same old analog standard definition programming converted to "1"s and "0"s for delivery from the cable company to your home. Your cable company can push a lot more stuff through its wires and optical cables if it's in digital form rather than analog. More stuff includes broadband computer service, telephone service, video-on-demand (VOD) service. Makes lots more money. So the cable people would like you to subscribe to their digital tier, pay a little extra so they can make lots more money.

Whether you can get local digital broadcast channels in high definition depends on where you live. Check with your local cable company, ask probing questions, and then confirm with a second source--- the people who answer the phones may not have or understand the latest information.

If they do offer high-definition programming, you'll need a special set-top box (or a CableCARD, if you have a new HD set that is equipped for that), or just a "digital cable ready" HDTV if you don't want premium (extra-cost, scrambled) channels.

Cable Set-top-boxes

There has been a move afoot to change the nature of those cable boxes that people use for premium and interactive services (this applies only to the new digital set-top boxes equipped for HD). The government some years ago (1996) told the cable industry to split the security functions (premium program encryption, etc.) of the box from the non-security functions (those boxes called "navigation devices"--they facilitate access to the various services offered by the cable company: interactive guides, video-on-demand, pay-per-view, etc.).

This action would open up the market for the non-security functions to third party suppliers (so if you wanted interactive services, you could buy your cable box from Best Buy or wherever, rather than taking what the cable company gave you, for whatever price they wanted to charge you). The goal is to increase competition and innovation, to give consumers better products for less money. It would also stimulate the availability of digital cable ready television sets.

The cable companies would be prohibited from making their own proprietary integrated cable boxes--that is, set-top boxes with both security and non-security functions built-in. Their ability to offer integrated boxes to their customers effectively shuts out competitors, who don't have access to the security functions.

Well, this has been dragging on for years, and postponed a number of times--the latest is an extension of the deadline from July 2006 to July 2007. The cable industry wants the prohibition eliminated altogether.

This latest extension was granted because the possibility of a downloadable software solution to the security half was in the offing. If a simple software download into any cable set-top box could replace a separate potentially costly piece of hardware, everyone would save a lot of money. The software could be downloaded into a third-party set-top box bought at a retail store as easily as into a box supplied by the cable company. The cable industry has until December 1, 2005 to report to the FCC on whether such a software security solution is doable. (If anything has happened, I haven't heard about it.)

The cable industry has argued that with more than a hundred million digital-to-analog converter boxes expected to be needed for cable-connected analog sets at the end of the transition, the added expense of separating security and non-security functions would threaten the transition to digital TV. The FCC has decided that it may allow cable companies to distribute simple integrated cable boxes that downconvert digital signals to standard-definition analog for their customers who wish to continue using their analog TVs after the end of the transition. Each such model converter box would have to be separately approved under a waiver.

After the transition ends (February 17, 2009, when analog broadcasts cease), many smaller cable companies want to downconvert the digital channels to analog at their head-end and send it out to all of their customers, even those with digital sets. If that happens, none of their subscribers will need digital-to-analog converter boxes (but neither will any of them get digital/high-definition programming, even if they have an HD set).

The broadcasters want the cable people to send out their pristine digital signals to everyone and have the customers with analog sets buy digital-to-analog converter boxes (or have the cable company give them the converter boxes for free).

Legislation that says what cable companies will be able to do is pending, seemingly self-contradictory, and baffling. One provision says they have to send out the broadcasters undegraded digital signal, and another provision says they can downconvert to a standard definition analog signal until 2014, while perhaps also sending out another digital signal, either standard definition or high-def. I will keep watching the bill as it gets closer to passage.

The D/A converting cable boxes could cost $7 to $28 billion. Motive enough, I guess, to want to eliminate the need for them.

So anyway, we still aren't close to banishing the cable company's integrated box, but now we have something called "CableCard" that lets you plug an electronic card that you get from your cable company (the security function) into a slot in your new "Digital Cable Ready" TV. This device lets you get your high-definition/digital premium programming simply by plugging the cable into the back of your set--no box!

The non-security functions have been built into the TV. The current limitation is that it only covers one-way services--no interactive VOD, PPV, etc. Something many subscribers want.

The cable companies have not been pushing CableCARD because there were some technical teething problems and because they make a lot of money on two-way/interactive services, as well as rental fees on their interactive integrated set-top-boxes.

There is a two-way CableCARD in development but negotiations are expected to drag on for years. The FCC has described the pace of those negotiations as "disappointing." The FCC is also concerned about the cable industry's apparent lack of support for CableCARDs, and has directed Comcast, Time-Warner, Cox, Charter, Adelphia and Cablevision to file status reports on CableCARD deployment and support beginning August 1, 2005, and every 90 days thereafter.

The movie studios, the computer industry, the satellite carriers, and the broadcast networks have joined the cable and consumer electronics industries in the closed-door two-way CableCARD negotiations. With a committee this size, and with so many different agendas, agreement on a standard will be like the second coming.

Cable channels going high-def?

Have you noticed that out of more than a hundred "cable" channels, there are only a handful that are high-definition?

The cable channel programmers are certainly interested in making the switch to high-def, they just want to wait until enough of their viewers have bought HDTVs and bought into the cable company's HD service.

The shift to HD is starting. The Discovery Channel has an HD version, and both HGTV and Food Network have indicated that they will go high-def in 2006.

Right now they are likely producing many of their shows in HD, programs that will be aired over the next few years, and shows that will be rerun in the future. It's just that putting them on the air NOW in HD will not bring them very much advertising revenue (and will pull viewers away from their income-producing standard-def channels). So now you see them down-converted to standard-definition.

Nevertheless, cable companies who are rolling out high-definition fare are signing up lots of viewers (Comcast is selling close to a million HD-capable set-top-boxes per year), thanks to HD events like the Super Bowl.

Video-on-demand

VOD is what the cable companies want you to buy, more than high-definition programming. Movies any time you want them. The Hollywood studio execs do not share their enthusiasm, preferring you to buy their DVDs if you want to watch a movie on your own schedule.

DVDs are bringing in a ton of money for the studios; VOD isn't. Advertisers aren't seeing a lot of benefits, either. For this reason, don't expect VOD to make inroads for at least five to ten more years, if then.

But who really knows what's going to happen that far in the future?

Dual and Multi-cast Must-Carry

Digital Must-Carry is the follow-on to the analog provision that says cable companies have to carry TV broadcasters' signals as part of their basic tier of programming.

The current twist is that we're in a transition period when TV broadcasters are transmitting parallel analog and digital signals. Many cable companies have already maxed out their bandwidth with the channels they are now carrying. They say they cannot add the broadcaster's digital channel (in addition to the analog channel) without kicking off someone else.

Actually, there seems to be a way to do this because new digital compression protocols allow them to cram more channels through the pipe to your house. But it will cost them money and they will not get any more advertising or other fees by doing it.

Some broadcast stations (while demanding that the cable people carry both signals) are demanding payment from the cable companies to carry their high-definition programming (in an attempt to earn some revenue from their advertising-poor digital channel).

Oh, and the other thing is that many broadcasters are deciding that they want to broadcast up to five standard-definition channels of programming in lieu of one high-definition channel. Five times the opportunity for advertising revenues. Most would broadcast high-def during prime-time, but switch to standard-definition for the off hours (daytime, etc.).

Some want an all-news channel, another weather channel, a sports channel, those all-important home shopping channels, and most vocally, when they're talking to the government--public service channels.

Don't we have enough channels?

Many broadcasters think not, but with most people getting their programming via cable and satellite, the broadcast stations have figured out that if only people with antennas can watch all of their five new standard-def channels, their audience share will be pretty pathetic.

So they are lobbying the government to require the cable companies to carry all of those derivative channels. It's called multicast must-carry, but the government isn't biting. So far.

The cable people are holding out their long-in-the-making agreement with the public television stations as proof that such a government mandate is not necessary or desirable.

Cable agreed to carry public broadcasters' digital multicast signals in addition to their primary HD signal, saying if broadcast stations produce compelling programs that the public wants (like public broadcast stations apparently have), cable will carry it.

Look for lots of channels from your local PBS station.

The FCC in June 2006 was going to issue new proposed regulations about multi-cast must-carry but pulled the proposal at the last minute. Chairman Martin wants must-carry; others don't.