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The digital television revolution didn't exactly take the country by storm in 2002, but significant strides were made on the road to the Federal Communications Commission's 2006 deadline to end analog broadcasting.
The theme for the year was "The Powell Plan" — FCC Chairman Michael Powell's multipoint "voluntary plan" for broadcasters, cable and satellite providers, and consumer electronics manufacturers to advance the transition.
The plan sought to both increase compelling digital television content and ensure it would be delivered over cable, by asking for the following:
Broadcast and cable networks were asked to deliver HDTV or other enhanced DTV service for 50 percent of prime time hours, while local network affiliate stations in the top 100 markets were asked to pass those signals through unaltered by Jan. 1, 2003.
Cable systems with 750MHz or greater channel capacity were asked to carry up to five DTV broadcast stations or other enhanced DTV programming for 50 percent of prime-time hours, while offering customers HD-capable set-top boxes with digital interfaces.
Satellite TV providers were to carry up to five channels of HDTV or enhanced digital programming for 50 percent of their prime-time hours by Jan. 1, 2003.
And, in the most controversial item, television manufacturers and retailers were asked to adhere to a phased-in schedule that would lead to DTV tuners in all television sets by Dec. 31, 2006.
When the CE industry failed to respond to the request by August, Powell essentially mandated all TV sets 13-inches and larger and other products that normally carry TV tuners to include ATSC terrestrial (DTV) tuners by July 1, 2007.
Under the five-year phased-in guidelines, DTV tuners are to be added to 50 percent of sets measuring 36 inches and larger by July 1, 2004, and 100 percent by July 1, 2005. After that, 50 percent of sets measuring 25 inches to 35 inches are to add DTV tuners by July 1, 2005, and 100 percent by July 1, 2006. The rest are to conform by July 1, 2007.
Powell also ordered 100 percent of other devices that normally receive television signals — such as VCRs and personal video recorders — to include DTV tuners by July 1, 2007.
The Consumer Electronics Association (CEA) charged the decision would put an undue cost burden on consumers and filed a lawsuit to overturn the order in October, but a verdict is not expected until 2003.
Despite the mandate, DTV products continued to sell briskly through the year. According to CEA sales-to-dealer statistics at the end of September, total DTV unit sales for the year reached 1,585,541 on dollar sales of more than $2.7 billion, up 83 percent from the first nine months of 2001 and up 69 percent in dollar sales.
The CEA also reported that integrated DTV set sales for January through August 2002 totaled 106,030 units and $240.4 million.
From a broadcasting standpoint, the year was somewhat disappointing as about 70 percent of the country's commercial television broadcasters failed to meet the FCC mandated deadline to begin DTV broadcasting by May 1, 2002.
Most of those failing to comply were smaller market stations that filed for extensions due to tower construction and financial hardship issues. Still, approximately 550 of the nation's approximately 1,300 stations had begun transmitting digitally by the fall. In the top 30 markets, covering about 54 percent of the TV households, 113 of 119 top-four network affiliates were on the air with DTV. Markets covering 91.9 percent of households were receiving DTV signals, the FCC's Powell recently told the association for Maximum Service Television (MSTV).
International CES provided a wake-up call to many cable system operators, who were stunned to see dozens of new digital television sets and monitors being demonstrated with HDTV programs delivered via their satellite competitors. That coupled with the Powell Plan encouraged the 10 largest cable operators, serving approximately 85 percent of the country's cable subscribers, to announce HDTV programming plans for 2002-03.
Meanwhile, the cable and CE industries continued to clash on equipment interoperability standards that would allow cable services to be played on DTV sets without the need of special set-top boxes.
One of the biggest obstacles to both cable and over-the-air broadcast programming producers centered on copy protection solutions.
The transition stalled as the industries continued to fight out the need to protect copyrighted content vs. enabling consumers' fair use rights to record programs in their homes.
Broadcasters were most concerned with protecting their signals from retransmission over the Internet. By the fall, a possible solution appeared to be gaining consensus on "a broadcast flag."
This basically called for use of a version of the Digital Transmission Content Protection (DTCP) — a.k.a. "5C" — system that was developed for FireWire digital streams with added safeguards against Internet re-distribution. However, opponents led by Philips raised strong objections to elements of the broadcast flag proposal, claiming that certain Hollywood studios were working with the small group of 5C developing companies to push through a system that could harm fair-use recording rights.
Opponents to the proposed solution contended it would give outsiders control over the use of broadcast TV content in the home and raise issues of cost, complexity, reliability and consumer confusion.
NBC and HDNet produced the HDTV event of the year — the Winter Olympics from Salt Lake City. The spectacle was produced by HDNet production trucks for both the NBC network in exchange for the right to carry the programming on the HDNet channel on DirecTV, on a 24-hour delayed basis.
More is on the way in 2003, as the ABC Network announced plans to televise Super Bowl XXXVII on Jan. 26; the NBA finals on June 4-8; and the NHL's Stanley Cup finals on May 31-June 9, in 720p HDTV. ABC also said it would produce next year's (2003) season of "Monday Night Football" in 720p HDTV.
Cable network ESPN also announced plans to begin to simulcast its ESPN channel in 720p HDTV starting in April 2003. In the first year, "ESPN HD" will include 100 live game telecasts from Major League Baseball, the National Basketball Association, the National Football League and the National Hockey League.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.