March 11, 2008

The HD Arms Race

Cable’s HD VOD marketing pitch buys time for its engineers, who are racing to catch up with DirecTV and FiOS' linear HD channel capacity.

By Peter D. Shapiro

Q: Which service provider offers the most HD content?
A: It depends how you count HD TV choices. Or, more precisely, on how the consumer counts them.

DirecTV’s website lists over 90 HDTV channels, several multiples of the number on any cable system. These are carried via DirecTV 10, a recently launched satellite that transmits over Ka-band spectrum and thereby substantially increases the capacity of DirecTV’s legacy Ku-band satellite system. DirecTV 11, a second Ka-band satellite, is scheduled for launch shortly and will provide even more capacity for HDTV channels. There is a catch: To receive the HD channels, subscribers need new terminals that can receive Ka-band as well as Ku-band.

Not to be outdone, Verizon claims that by the end of 2008 FiOS TV will deliver 150 HD linear channels plus 1,000 HD choices over VOD. While getting from FiOS’ current 26 HD linear channels (at last count) to 150 will be a big jump, the FiOS network is likely to be able to deliver the required capacity. Like many up-to-date cable systems, FiOS employs 860 MHz for its TV service. However, there are significant differences with cable that will result in more effective network capacity for linear HD channels over FiOS, at least in the short term:
         
• FiOS already employs a relatively small portion of its video bandwidth for analog channels, and by February 2009, FiOS will reallocate even this segment entirely for digital TV. 

• Verizon can allocate the entire 860 MHz for downstream standard definition and HD TV channels. On cable, some of this bandwidth is allocated for upstream and downstream VOD and Internet access. On FiOS, traffic for VOD and Internet access is carried on different wavelengths (for upstream and downstream) over the fiber plant and does not subtract from the 860 MHz for linear TV.

Although cable engineers are past masters at expanding effective capacity of the cable networks, even they will not be able to tweak the cable networks enough to match DBS or FiOS in delivering 100 to 150 linear HD channels by the end of 2008. Each of the multiple techniques to expand effective capacity of cable’s HFC (hybrid fiber coax) networks, including switched digital video (SDV), migrating some channels from analog to digital, and so on, will take time to deploy broadly across cable’s footprint. 
 
Hence, HD over VOD! Comcast announced in January that it will offer far more HD than anyone else—“more than 1,000 HD movies and TV shows every month”—on Comcast’s VOD platform.

This is a clever competitive move. HD over VOD tosses marketing fairy dust on consumers who ask, “Where can I get the most HD programming for my new flat-panel HDTV set?” Notably, DBS cannot provide real VOD and Verizon lacks the MSOs’ scale and history as video distributors and is therefore likely to lag several steps behind in lining up attractive HD VOD content.

Eventually, consumers will clarify whether they favor an MSO’s 1,000-plus HD VOD choices along with its 50 to 60 linear HD channels, versus DBS’ or FiOS’ 100 to 150 linear HD channels (plus FiOS’ own HD over VOD), or whether they can even tell the difference. Meanwhile cable engineers will have breathing room to expand usable capacity on cable networks for more linear HD channels, in case HD over VOD turns out not to be enough.

Peter D. Shapiro is founder and principal at PDS Consulting, a cable & telecoms consultancy (www.pdsconsulting.net). He can be reached at: peter@pdsconsulting.net.