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Television manufacturers this year will be introducing sets as small as 25 inches that comply with the next phase in the digital tuner mandate issued by Federal Communications Commission Chairman Michael Powell in 2002.
But early attempts to seed the market with large-screen fully integrated products were less than spectacular, manufacturers and retailers have said. And the industry is working on options to avoid a consumer backlash in smaller screen sizes.
Over the last six months, so-called DTV monitors — TV displays lacking an internal ATSC tuner — have been stronger sellers than the better featured new arrivals, as the majority of consumers continued to shop for the best prices available.
Even the inclusion of uni-directional CableCARD slots — which enable consumers to receive premium digital cable TV services in standard and high definition formats without the need of a set-top decoder box — were not sought out by most consumers.
The problem: Most consumers don't want to spend the $300 premium asked for the new tuning technology, which many will never use.
This year manufacturers are forced to phase-in integrated tuning into lines of more affordably priced TVs, with screen sizes measuring 25-inches to 35-inches. This segment appeals to a much larger audience than larger screen models.
TV manufacturers have attributed the lack of interest in early integrated TVs to consumers failing to understand that they need an ATSC tuner to receive digital stations over the air.
In addition many consumers prefer to have an outboard cable decoder box to receive local digital TV stations and premium HDTV cable channels, while also offering direct ordering capability for video-on-demand and pay-per-view content.
Then there are satellite TV subscribers who have HDTV satellite decoder boxes which already include ATSC tuners.
But the biggest reason consumers have avoided integrated sets is the extra cost, which is likely to be an even bigger issue in smaller screen models, retailers and manufacturers have said.
The situation caused so much concern that the CEA and the Consumer Electronics Retail Coalition petitioned the FCC in November to eliminate the phase-in portion of Powell's order. The associations said they would rather see the deadline for 100-percent compliance be accelerated to March 1, 2006, for televisions with screen sizes measuring 25 inches to 36 inches.
The associations argued that the change would serve to speed up the DTV transition, but it would also prevent retailers from ordering monitor-only products at the expense of tuner-based products in the phase-in period, beginning in July.
Under the FCC order, TV makers are to include ATSC tuners in all sets measuring 36 inches and larger, and in half of all sets they sell measuring 25 inches to 35 inches by July 1, 2005. Then on July 1, 2006 all sets measuring 25 inches or larger must include digital TV tuning.
All other sets between 13 inches and 24 inches must have ATSC tuners by July 1, 2007. Manufacturers remain free, though, to sell true monitors without a DTV tuner as long as they do not include NTSC (analog) tuners, as many plasma displays and front projectors are sold today.
A big concern is that adding as much as a $300 premium to the cost of a 25-inch set that sells for under $500, will make it next to impossible to sell the new integrated models.
While waiting for an answer from the FCC, some television manufacturers have taken matters into their own hands.
Thomson-TCL Electronics is announcing at CES that it will introduce seven RCA direct-view TV models featuring integrated ATSC tuner/decoders and 480i (interlaced) Standard Definition Digital TV (SDTV) image resolution.
Greg Bosler, TTE's North America Profit Center Executive VP, said the company has been working diligently to offer an affordable solution to the DTV tuner mandate and has arrived at a system that will command a premium starting for as little as $100.
An entry RCA 27-inch integrated SDTV will start at $269, he said. Screen sizes for new SDTV models — which are essentially analog televisions with digital tuners — are 27-inches and 32-inches in standard 4:3 aspect ratios.
“We are forging ahead for a simple reason, there are going to be consumers who want to replace a TV in the bedroom or the den, with something that is digital but isn't high definition,” said Dave Arland, TTE's spokesman on policy and governmental affairs.
Another option is created by a loop-hole in the mandate that allows the sale of TV displays without ATSC tuning if NTSC analog tuners are omitted as well. Manufacturers would then skirt the mandate by packaging their displays as monitors.
But some retailers have requested only ATSC and CableCARD-ready rear-projection TV products from vendors in 2005 in an effort to avoid any additional consumer confusion, said Bob Scaglione, Sharp marketing senior VP.
“Some retailers have be very aggressive about offering full solutions with ATSC and CableCARD, while others have had a combination of both monitor products and HDTV,” he said. “For our products that price delta for integrated tuning isn't that much higher, so consumers are opting for full-tuner solutions thinking they may need the capability in the future.”
Still, many manufacturers said they will continue to market some products that omit tuning, particularly in more expensive flat-panel TV sets.
Thomson TCL Electronics, for example, will offer HDTV monitors in the 27-inch and 32-inch 4:3 direct-view CRT screen sizes.
Toshiba marketing VP Scott Ramirez said his company will continue to carry HDTV monitors through the first half of 2005, before transitioning the line over to 100 percent fully integrated HDTV sets.
Ramirez said that if the CEA petition is upheld by the FCC by 2005, sales of Toshiba's direct-view CRT high-definition models “will be mostly HD monitors.”
“The market being what it is, the consumer is voting for HD monitors now. If we go to 100 percent compliance in March 2006, as we've requested, then probably in the first quarter of 2006 most companies will completely change over to integrated,” said Ramirez.
Toshiba expects to have an easier time selling integrated tuning in larger flat-panel TVs, he added.
“In flat-panel, you are at a much higher price point, where the customer is looking for the highest technology,” he said. “There, I think integrated products are much more sellable.”
Ramirez said he is looking at offering a mixture of fully integrated and monitor-only flat-panel televisions in 2005, but the majority of the models will include ATSC tuning and digital CableCARDs.
Samsung planned to phase in integrated tuning into many of its DTV direct view and rear-projection DLP displays around the middle of last year. But in microdisplay rear-projection models those plans were delayed by several months.
This year, any model in the Samsung line with a screen size of 36-inches or larger will be introduced as a fully integrated DTV set, said Jim Sanduski, Samsung Visual Media Products marketing VP.
Sharp said it will include ATSC tuners in all 37W-inch and larger AQUOS LCD TVs by July 1, 2005, as well as in its new lines of DLP rear projection televisions, said Sharp's Scaglione.
Additionally, in all LCD TVs with 16:9 screen sizes below 37W-inches, AQUOS offers a choice of integrated tuning, or HDTV monitors. In 37W-inches, the company offers an “all-digital” package featuring ATSC tuning and a CableCARD slot. It also offers an ATSC-only version, “for customers who feel they may not need a CableCARD at this time,” Scaglione said.