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USDTV Rolls Out 'Over Air' Cable TV

1/09/2004 05:42:00 PM Eastern

LAS VEGAS — U.S. Digital Television (USDTV) has entered into a strategic financing and manufacturing agreement with Chinese TV manufacturer Hisense that will provide USDTV with $15 million in financing to roll out its 'over-the-air' cable service.

In announcing the agreement during CES, Hisense president Shumin Yu said that USDTV 'has created a unique business model for the industry,' adding that Hisense's 'advantages in manufacturing, cost efficiency and technology will help build a more competitive market' for the products and service.

USDTV chairman/CEO Steve Lindsley said, 'finding a world-class manufacturer was one of the key components' of the company's strategy. 'I've been to the Hisense factories, and they're world-class — their TV product is fantastic, their quality control is outstanding, and their people are very committed.'

Lindsley said that the $15 million in financing, which will be used to produce 100,000 digital terrestrial set-top boxes, will enable the company to focus on expanding its distribution in new markets this year. 'The $15 million in financing will jump-start our ability to get 100,000 subscribers quickly,' Lindsley said. 'With that base, we'll be able to launch out to the rest of the U.S.'

The company has already begun to roll out its service in Salt Lake City, and currently has 'several hundred' subscribers, who pay $19.95 a month for the service, along with a one-time charge of $99.95 for the receiver. The USDTV service uses secured digital spectrum to provide subscribers with cable and local broadcast channels via terrestrial broadcasts, with digital-quality (including HDTV) pictures and theater-quality surround sound. The company is offering free installation and a two-year price guarantee.

Company executives said that additional broadcast and distribution announcements would be made later next month. Plans call for USDTV service to be rolled out in 30 major markets in 2004, beginning in the Western United States. 'We want to be in places like Wal-Mart and malls, where we can set up kiosks and explain to customers what USDTV is, and how they can get it,' said Kevin Doman, the company's president of distribution. One of the objectives for both companies is to be able to subsidize the cost of flat-panel displays via the USDTV subscription service — similar to how the cellular industry subsidizes high-priced phones — in an effort to make them more affordable to the masses.

Hisense has already begun manufacturing set-top boxes at its facilities in China. Eventually, the companies said, they hope to integrate the USDTV receiver technology within flat-panel TVs themselves.