Having fully digested the Federal Communications Commission's decision to force TV makers to build digital over-the-air tuners in all TVs by the summer of 2007, product planners seem to be experiencing less heartburn than first expected, ongoing litigation not withstanding.
Under the new regulations, TV makers selling sets with screens 36 inches and above have to put DTV tuners in half of them by July 1, 2004, with a full migration to digital in those screen sizes by July 1, 2005.
For TVs with screen sizes of 25 to 35 inches, half must include DTV tuners effective July 1, 2005, and all must by July 1, 2006. All other sets between 13 and 24 inches must have tuners by July 1, 2007. Manufacturers will remain free, though, to sell true monitors without a DTV tuner as long as they do not have NTSC tuners included, as many plasma displays and front projectors are sold today.
Most product planners remain somewhat close lipped about product plans for 2004, in part, because they don't wish to overshadow product announcements for 2003.
Should the regulations remain in place, TV makers have the option of building sets with both digital and analog tuners or no tuner at all. The rules do allow companies to bundle an add-on digital tuner in a separate box, which would allow the sale of today's so-called DTV-ready sets.
The beginnings of a likely strategy seem to be emerging if no cable standard is in place before July 2004.
Those with input into product planning at most companies say privately that large-screen direct-view sets, those 36-inches and larger, will probably get built-in ATSC and NTSC tuners, already the case for a number of models in that range.
Most sources indicate it will be very unlikely that consumers will be willing to buy big sets without an NTSC tuner. Flat-screen displays, plasmas and LCDs, will probably go without tuners, as space becomes a factor in adding a second tuner.
Smaller direct-view sets, those 24 inches and below will probably be sold without any tuners and just a DVI port to connect to digital cable boxes, in part because some of the displays would be less expensive than the cost of adding tuners.
The screen sizes between 24 and 36 inches appear to be a gray area, as no clear consensus has appeared on how companies plan to equip those screen sizes.
While opinions in the industry on the mandate range from somewhat bothersome to actually being welcomed, there was near universal agreement that the new regulations miss the boat by not requiring cable operators to reach a standard to create cable-ready DTV sets.
"We're kind of hoping another shoe is going to drop," said Dave Arland, Thomson government & public relations director. "We will support [the new rules], as long as the cable issue is addressed."
"We feel that the new law makes sense," said John Taylor, Zenith public affairs & communications VP. "We feel that it will benefit consumers and manufacturers alike."
The cable TV issue, in part, is also behind the appeal of the FCC ruling filed by the Consumer Electronics Association (CEA).
"We don't feel it is in the consumer interest," said Jenny Miller, a CEA spokesman, noting a number of companies are already close to meeting the first stage of the mandate. "So far, it's been a market progression, and we don't feel that the FCC should tell manufacturers what to put in their products."
There's also some question as to the legality of the mandate. The FCC cited its authority under the 1960s All Channel Receiver act, passed by Congress to mandate that TV makers include UHF tuners in sets more than 40 years ago. There is some dispute as to whether that act applies to a digital signal, which is vastly different to decode and receive as compared to analog signals, and that is the basis of the appeal filed by the CEA.
Miller also talked about the lack of a cable DTV standard, echoing what a lot of manufacturers are saying. "Frankly, we'd like to get that sorted out, because it will be a lot more cost effective to build [cable compatibility] into the tuner, because so many of the components are in common."
And that is where the rub seems to be, as cable operators wish to keep all DTV routed through external receivers, in part to maintain protection over copyrighted material. As of now, the cable standards call for connecting such devices to monitors via a secure version (HDCP) of the DVI interface which is virtually non-recordable by consumers.
The cable operators say it is necessary to keep their programming providers, many of whom are owned by Hollywood studios, assured that their content won't be copied and traded across the Internet.
CEA and the TV makers want DTV over cable to work much as local analog cable works now, a cable into the back of the TV, and everything works, reserving the option for cable operators to use cable receivers for add-on services, premium channels, interactive TV and Internet services.
According to the latest CEA figures, only 4 percent of households currently own DTV capable displays or DTVs, while just 1 percent of U.S. households own ATSC, or digital, tuners. These low adoption numbers, four years after DTV broadcasts began, and the disparity between those with digital capable displays and those with tuners, were cited by the FCC in its ruling.
So why not just build the tuners into DTV-cable TVs? Two reasons: cost and at least a perceived issue with the performance in early generations.
On the cost issue, CEA claims adding tuners costs $400 a set right now, will be no lower than $100 per set by 2007. Currently, no add-on tuners are selling for less than $400, with most satellite/DTV combo receivers ranging between $600 and $1,000. The performance issue is more difficult to quantify.
The first couple of generations of DTV tuners offered spotty performance, and while newer tuners may perform in a more robust manner, consumers may still be concerned about being tied to an outdated tuner technology.
Not everyone agrees that tuner cost will prove an onerous burden. "We think the cost of ATSC tuners will be driven significantly," said Zenith's Taylor. "We're building them now, and we know the cost isn't more than $200. We expect it to be under $75 by 2004, and comparable to an analog tuner by 2007."
Still some feel that digital tuners and DTV have not become a seamless experience for consumers.
"I don't think consumers have been confident about content, especially about being able to just plug it in and have it work, as it has been with cable," said Scott Ramirez, Toshiba America Consumer Products marketing VP. "If you can get it to the point where it works, and there's content, that's when I think people will want to buy tuners. But so far, broadcasts have been somewhat spotty on a market to market basis. Having a cable standard solves a lot of that, though."