IN LESS THAN FIVE months, all American full power television broadcasters are required to shut off their analog transmitters.
In Canadian border regions, this could present an opportunity as those remaining Canadian viewers who have resisted cable or satellite TV for so long, instead picking up a number of American TV stations with their rabbit ears. Unless they invest in some digital rabbit ears and a new television, they’ll need help getting the programming they are used to.
For example, in Windsor there are 22 stations available off-air, most from the other side of the border Detroit, Mich., and Toledo Ohio. On February 17th, 2009, those stations will go dark for Canadians who receive them off air. “We haven’t quantified this, but there may be some opportunities there,” said Cogeco vice-president Tom McCutcheon at last week’s Canadian Cable Systems Alliance annual conference in Mont Tremblant. He was speaking at the Monday afternoon session put on by CTAM Canada.
(In fact, some Canadians are now calling their cable companies to see if their televisions will work because of the multi-million-dollar campaign to alert Americans that analog TV broadcasting is being turned off. It’s an analog/basic cable growth opportunity, some think.)
Converting – or up-selling existing analog customers into digital – is an opportunity upon which American cable operators are trying to capitalize, too. They are hopeful that those few (less than 10%) Americans who haven’t yet chosen cable or satellite, will become cable subscribers, adding new growth to the MSOs.
For those Americans who aren’t interested in paying more for cable or satellite but still want their televisions to work, the U.S. government is handing out $40 coupons to use to purchase a digital to analog converter or towards a cheap cable box, if they are analog subscribers but can’t afford to go for the expensive digital cable decoder.
But while they are hoping for an opportunity for growth, American cable operators are also facing a double-whammy in terms of capacity, said consultant Imran Shaw of IVB Consulting during the panel.
“There are a fair amount of challenges in terms of capacity,” he explained, especially when added to what cable is already doing in terms of video on demand, high definition, and digital video recording. “There is a tremendous amount of pressure,” said Shaw because the FCC requires cable companies to carry all broadcast feeds – analog, digital multicasts and high definition.
Whether or not Canadian cable operators will have to follow suit exactly (they have to carry both HD and SD now), what U.S. cable operators are going through this fall and winter is instructive for Canadians, since our own analog shut off is set for August 31, 2011.
To alleviate the capacity constraints, American MSOs are staring down a number of choices, from full-on “forklift upgrades” of the entire plant, to adding new technology such as switched digital video, to giving away digital boxes and making all customers digital.
Massillon Cable’s Bob Gessner was in town touting the all-digital conversion and count him as a non-believer in SDV. His Ohio company has a Federal Communications Commission waiver in hand which says he doesn’t have to have separable security in his cable boxes nor does he have to carry both the analog and digital streams of broadcasters’ signals because he has told the FCC all of his customers will be digital by February 17, 2009.
And, he’s using inexpensive converter boxes supplied by Canada’s Evolution Technologies to make it happen for his 45,000 customers.
And making everyone digital has cleared up a huge swath or bandwidth which Gessner says will make the company much more competitive on the high definition front, where DirecTV and Dish Network have a clear lead with over 150 HD channels.
“I know I could do a full upgrade and I know I can do converters – which will give me four times the bandwidth for less money,” said Gessner, who says going all digital and getting the FCC waiver is more important to him than the fact the Evolution boxes can’t (yet) do HD nor deliver VOD.
Added Westman Communications president Dave Baxter, who was also on the panel, he was intrigued by Wessner’s solution because: “I’m certainly determined not to upgrade channel capacity again.”
Maybe so, but growing their high definition offering on has become job one for U.S. cable operators under threat from their two very active satellite competitors and telcos which are building new fibre to the home networks. “HD channel growth has gone faster than anyone had anticipated,” said Shaw. “On anyone’s planning horizon should be 250 HD channels.”
“Virtually everything is moving towards HD because it’s what consumers are expecting,” confirmed Gessner. “And our competitors have unfortunately captured the initiative.
