Digital TV Strategy ""In Disarray,"" Says Strategy Analytics
Less than 5 Percent Of Households Will Be Watching DTV By 2005 The FCC's plan to convert US households to digital television by 2006 is on the verge of collapsing, according to a new report by consultants, Strategy Analytics, Inc. The report identifies key reasons for the strategy's failure and suggests a new approach allowing for the return of analog broadcast spectrum by 2013. The report - ""Interactive and Digital Television: Issues in the Transition Phase"" - has been released to subscribers to Strategy Analytics' Interactive Home strategic advisory service. Strategy Analytics provides information and insights which help competitors develop strategies in home electronics and new media, communications and computing business. Terrestrial broadcasters can use their digital (DTV) capacity for either HDTV (High Definition TV) or SDTV (Standard Definition TV). There is currently debate over whether the industry should change technical specifications of the ATSC standard. However, the Strategy Analytics report suggests that there is still no proven business model for either HDTV or SDTV, whichever technical standard is adopted. HDTV receivers will always be too expensive for mass market adoption. The SDTV option is under threat from satellite and cable operators, which are rapidly converting their customer base to 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 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 recommends a Universal Broadband strategy, encouraging universal dependence on non-terrestrial broadcasting, and eventually allowing analog terrestrial spectrum to be switched off and replaced by digital. ""Analog broadcasting is an anachronism in today's digital world, but it also fulfils a public service role,"" says David Mercer, Senior Analyst with Strategy Analytics. ""Switching off NTSC will be a far greater challenge than most people realize."" Strategy Analytics predicts that less than 5 percent of US households will be watching over-the-air DTV by 2005. Terrestrial broadcasters are expected to use their digital capacity increasingly for data services.