TORONTO – A 425-channel high-definition (HD) satellite television universe will emerge in Canada by 2020, with all standard-definition (SD) programming finally making the conversion to HD by that time. That was one ambitious and optimistic outlook revealed at the recent Canadian Digital Broadcasting Summit 2007 held in Toronto this week.
However, some cable industry players who attended the conference are adopting a more cautious perspective.
The bullish HD camp includes Ciel Satellite Communications Inc. of Kanata, Ont., and Nordicity Group Ltd., a telecom strategy consulting firm with offices in Toronto and Ottawa. In response to Industry Canada’s July 2006 call for applications to license new satellite orbital positions, Nordicity conducted and released an HD market assessment on behalf of Ciel last fall.
Based on its research, Nordicity projects that approximately 25% of current TV channels will have launched HD versions by 2010. From 2013 onwards, first-mover HD converters will begin dropping their SD signals; starting in the same year, new TV channels will launch only in HD, Nordicity predicts.
According to Nordicity, the final conversion stage will occur in the 2016 to 2020 timeframe, with all so-called SD “laggards” converting to HD, and BDUs and broadcasters preparing for a post-2020 SD service switch-off.
Nordicity senior partner Peter Lyman explained that broadcast satellite capacity is currently constrained, but that problem will be alleviated with the roll-out of MPEG-4 compression technology, starting in 2008.
“We see a three-year roll-out (of MPEG-4) starting with Bell ExpressVu, which seems to be closer to doing that than Star Choice. Star Choice will start a year later,” Lyman said, speaking during a panel discussion on last-mile issues as they relate to HD deployment. “Once the orbital slots have been allocated and the satellite operators provide more capacity in three or four years, you’ll get quite a big jump there, which on a channel-by-channel basis will lead to about 270-plus HD channels in the 2011 to 2012 timeframe.”
During a separate session on future broadcast delivery capacity, Paul Bush, vice-president of broadcasting and corporate development for Telesat Canada, offered his perspective on the anticipated rate of conversion of SD channels to HD. According to Bush, within the next two to three years, 30 per cent to 50 per cent of SD channels will be converted to HD. In five years, that SD-to-HD conversion rate will be 75 per cent. Finally, 100-per-cent channel conversion from SD to HD is expected in 10 years, Bush said.
In the case of Bell ExpressVu, Telesat Canada’s expected launch of its Nimiq 4 direct broadcast satellite in 2008, followed by the Nimiq 5 launch in 2009, will enable the DTH satellite service provider to meet the demand for new high-definition TV channels, said Terry Snazel, vice-president of technology for Bell ExpressVu.
Recent market research figures from Bell ExpressVu suggest the current HD share of digital TV services is about 14 per cent, with HD set-top penetration of the pay-TV market sitting around 34 per cent. Up to 26 per cent of pay-TV subscribers say they plan to purchase HD services in 2007, according to Bell ExpressVu.
Less bullish about the HD market’s potential for rapid expansion is D’Arcy Hunt, director of TV product management for Rogers Cable Communications, which has experienced flat HD growth. “Right now, we’re sitting between 15-per-cent and 20-per-cent HD penetration of our basic cable subscribers,” Hunt said.
Rogers launched its first HD services in Q4 2001 and now has about 225,000 HD subscribers across the country. The cable operator’s current HD offerings include 38 HD TV channels and 20-plus HD video-on-demand titles.
Over the course of 2007, Rogers expects to add seven to nine HD services to its current offerings and is projecting that its HD subscriber base will grow to almost 350,000 by the end of the year. Starting in 2008, expansion of its broadcast delivery capacity will be the company’s primary focus, Hunt said, adding that he doesn’t share the opinion that MPEG-4 compression technology will be a panacea for the HD market’s current bandwidth constraints.
“When you have 250,000 set-top boxes in households…it’s very cost-prohibitive for us to go and swap out all that customer equipment for a new set-top box that would decode MPEG-4,” Hunt explained. “On the cable side, MPEG-4 is probably a little bit ‘too little, too late’.”
In addition, with next-generation OCAP (OpenCable Application Platform) set-top boxes expected to be available in 2009 or 2010, cable operators will again need to decide whether or not to replace all of their customers’ legacy set-top boxes or simply deploy newer set-tops as new HD subscribers come onside, Hunt said.
Given the various constraints on HD market development — not to mention the large number of older-generation cable customers who still receive analogue service and are not interested in having set-top boxes in their homes at all — a 420-plus all-HD channel offering in the 2020 timeframe does not seem realistic from Rogers’s perspective, Hunt said.
For smaller cable systems, that rosy HD universe picture is even fuzzier. Hamilton, Ont.-based Clearcable Networks which deals with a number of small cable operators as a supplier of technology and services, outlined a number of issues (this paragraph has been corrected to more properly define Clearcable).
“Historically, we’ve had a problem acquiring content, but that’s been opening up a little bit recently,” said Rob McCann, Clearcable founder and president. “And while we’ve been having wild success moving HD set-top boxes out the door, that wild success really adds up to single-digit penetrations. And when I say single digits, I’m really talking about one per cent, in the places where we’ve been lucky.
“So, as much as we talk about the demand for this from the subscribers, there’s not that much of a pull as we might expect — yet. And there’s also not a very large willingness from the subscribers to pay for that content yet,” McCann said.
In general, smaller cable operators should expect the transition period to HD services to be longer on the front side, meaning it’s going to take longer to get to critical mass, McCann said.
“Then it will come down in one big collapse, and we’ll see people not wanting to accept standard definition on their televisions any more, once they embrace HD,” he said. “But we think getting to that watershed will be much further out than people expect now.”
Linda Stuart is a Toronto-based freelancer who covered the Canadian Satellite Users Association annual Digital Television conference in Toronto this week.
