TV rivals muscle up for a high-def duel

Clint Swett
McClatchy Newspapers (MCT)
Larry Bell checks out HD television sets on display at Circuit City in Sacramento, California, Monday, September 26, 2007. (Jose Luis Villegas/Sacramento Bee/MCT)

SACRAMENTO, Calif. -- If high-definition is the new front in the battle for TV viewers, it appears that DirecTV is seizing the high ground - at least for now.

Fortified by new satellite capacity, DirecTV added 21 high-definition channels to its lineup last week, bringing its total to 30. It expects to double that by the end of October and offer up to 100 channels by year's end, although some of those will be pay-per-view, not new channels.

Although DirectTV appears to have the most ambitious plans, competitors aren't ceding territory without a fight. By the end of 2007, AT&T said it will graft five HD channels onto its current lineup of 27 and Comcast plans to add between four and eight, depending on the neighborhood.

More than price, more than features or fancy gadgetry, it's the basics - more HD programming - that TV carriers are counting on to entice subscribers.

"This is an arms race. It's the high-definition equivalent of Russia and the United States during the Cold War," said Phil Swann, a consultant and publisher of TVPredictions newsletter.

Analysts say companies like AT&T and Comcast have to respond aggressively or risk losing the business of roughly 30 million households that already have high-definition TVs or the hundreds of thousands more that plan on purchasing them during the holidays.

"The future of television is high-def," Swann said, "and for TV providers to remain strong, they need a lineup to appease that growing audience."

That's especially true with the approaching holiday season, when consumers will be snapping up new HD sets. "People will want HD programming and if someone is not going to give it to them, it's not that hard to switch carriers," he said.

Satellite companies DirecTV and Dish Network have a bigger stake in offering more HD programming, said Jimmy Schaeffler, an analyst for The Carmel Group.

Because the satellite carriers don't offer Internet, telephone service or video-on-demand as cable companies do, they need to attract customers with other goodies.

"When you are fighting the cable companies that have these bundles, you need a perceived advantage," Schaeffler said.

DirecTV is betting huge sums that customers will respond to its HD upgrade. The company said it has spent more than $1 billion in the past few years beefing up its satellite capabilities to carry more HD channels.

Since HD requires nearly six times as much bandwidth as standard-definition television, the company launched a $250 million satellite earlier this year to handle increased HD programming and plans to put a similar satellite into orbit early next year.

"Several years ago we looked into the future and it was clear to us that HD was the next wave," said Derek Chang, DirecTV's executive vice president of content strategy and development.

Roseville, Calif.-based SureWest Broadband has much the same outlook. Eventually, nearly everyone will have a high-definition television, said Pete Drozdoff, the company's vice president of marketing.

"We want to be poised to capitalize on that, to be on the cutting edge," Drozdoff said.

In November, Sacramento-area provider SureWest Broadband plans to add 15 new high-definition channels to the 23 it already has.

Dish Network, which offers its customers 39 high-def channels (including 15 exclusive channels from the now-defunct Voom HD network), wouldn't comment on future plans.

Comcast plans to add between four and eight new HD channels this year, part of a larger strategy to woo HD viewers, said company spokesman Bryan Byrd.

The Philadelphia-based cable company also is expanding its high-definition video-on-demand offerings from 200 to more than 800 by next year.

As important as having lots of HD channels, "it's the number of HD programs available to watch at any time via video-on-demand," he said in an e-mail statement.

Broadcasters, too, are scrambling to roll out channels to feed the growing appetite for HD content. According to the National Cable and Telecommunications Association, there were 32 national HD channels available (not including Voom) in early September, up from four in 2002. At least 64 more are expected to launch this fall or in early 2008.

And the vast majority of the nation's 1,400 network-affiliated TV stations carry some high-definition programming, said Dennis Wharton, a spokesman for the National Association of Broadcasters.

"It's such a competitive market, and when people are sitting with their remote controls they tend to pause a little longer when they are looking at a picture that's in high definition as opposed to standard definition," he said.

The bulk of HD programming is a higher-quality version of what viewers typically see on regular TV. Offerings from the major providers include HD versions of HBO, Showtime, Weather, Bravo, A&E, Animal Planet and the History channels, as well as many of the regional sports networks.

But for the immediate future, much of the programming shown on those channels won't be true high-definition because it wasn't originally shot with high-definition cameras.

Instead, existing programming, such as movies and older TV shows, are "up-converted" by broadcasters, meaning they're modified to fit into the widescreen format and enhanced to look crisper on HD screens. Most cable HD set-top boxes can perform their own up-conversions before the signal reaches the TV screen.

There's debate, especially among videophiles, about how good those enhancements are. But some experts contend that with high-quality equipment and the correct TV settings, most casual viewers can't tell the difference between up-converted programs and those filmed directly in HD.

Cable and satellite companies aren't fighting for HD viewers with channels alone. They also are rolling out more HD-friendly equipment, such as digital video recorders. AT&T's U-verse, for instance, offers consumers an HD-capable DVR plus two HD receivers as part of its basic packages. DirecTV, by contrast, charges $200 for a high-definition DVR.

Most providers charge about $10 a month extra for customers to get HD versions of the channels in their subscriber package.

Even as the carriers add a passel of new channels, the cost to consumers isn't likely to go up immediately - primarily because of competition, experts say.

Instead, cable and satellite companies are likely to roll the higher HD costs into their annual rate increases for subscribers, said Schaeffler, the Carmel Group analyst.

"Eventually it all gets passed on to the consumer," he said.





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