US Digital TV Strategy Faltering?

The FCC's plan to convert US households to digital television by 2006 is on the verge of collapse, according to a new report by consultants Strategy Analytics. Their report, titled "Interactive and Digital Television: Issues in the Transition Phase," predicts that fewer than 5% of US households will be watching over-the-air DTV by 2005, with terrestrial broadcasters expected to use their digital capacity increasingly for data services. Terrestrial broadcasters can use their digital (DTV) capacity for either HDTV (high-definition TV) or SDTV (standard-definition TV), and there is currently debate over whether the industry should change the technical specifications of the ATSC standard.

However, Strategy Analytics suggests that, whichever technical standard is adopted, there is still no proven business model for HDTV or SDTV. "The SDTV option is under threat from satellite and cable operators, which are rapidly converting their customer base to what the report terms superior digital services." The analysts conclude that, over the coming decade, terrestrial broadcasting will continue to lose share to cable and satellite, and eventually to Internet-based online video distribution.

The report also highlights what it considers to be the difficulties associated with providing digital services to multi-device households. More than a quarter of US households own three or more TV receivers, most of which rely on over-the-air NTSC. Every set must be capable of receiving digital signals before analog broadcasting can be switched off. The report surmises that HDTV receivers will always be too expensive for mass-market adoption.

So what's the answer? The report recommends a Universal Broadband strategy, encouraging universal dependence on non-terrestrial broadcasting, and eventually allowing analog terrestrial spectra to be switched off and replaced by digital. David Mercer, senior analyst with Strategy Analytics, says that "Analog broadcasting is an anachronism in today's digital world, but it also fulfills a public-service role. Switching off NTSC will be a far greater challenge than most people realize."