Rising Flat Screen High Definition Television

Of course, it helped that HDTV received an unprecedented boost from the government when the Federal Communications Commission forced the technology transition onto broadcasters and the consumer electronics industry by setting a deadline of Dec. 31, 2006. That, critics outside the industry complained, is a prime example of corporate welfare.As might be expected, industry executives don't see it that way. "This is not a government handout; it's an unfunded mandate," said Marty Zanfino, director of product development at Mitsubishi Digital Electronics America Inc. (Irvine, Calif. ). "We've received no money" to fund the transition. Nonetheless, thanks to the FCC's deadline, the government is creating a guaranteed market for new digital TV sets in the United States. That mandate will make it possible for the government to reclaim analog spectrum and auction it for other commercial use. And while nobody in Washington is convinced the government can enforce the yearend-2006 cutoff date, everyone in the DTV food chain appears to have found a way to profit from the premise of a digital deadline. Digital transmission in the largest TV market in the world has been politicized since the 1980s, as broadcasters lobbied for free new spectrum, and has been riddled with implementation hiccups. DTV has been tugged in different directions by the often conflicting interests of network TV stations, TV set manufacturers, the personal-computer industry, Hollywood studios, cable and satellite operators, the FCC and the Congress. Roadblocks to HDTV have included the high cost of sets, lack of digital programming, slow buildup of the digital broadcast infrastructure, limited signal coverage, consumers' generally low awareness of digital HDTV and the format's incompatibility with digital cable.

Why now?
The convergence of technology and government action promises to convert what has been a trickle into a torrent. The way Mitsubishi's Zanfino sees it, the landmark FCC mandate and adoption of a digital cable standard are "two positive signs kicking in this year." The FCC has ordered that by July, 50 percent of all TV sets with a screen larger than 36 inches shipped in the United States must integrated, or be sold with, a terrestrial digital TV tuner/decoder. Further, the FCC mandate requires that by July 2005, 100 percent of both large-screen (larger than 36-inch) and midsize (25-inch to 36-inch) TV sets must integrate a terrestrial digital TV tuner/decoder. While most leading TV manufacturers have pledged compliance, few seem clear on how the FCC can actually enforce such a rule. Nor does anyone know what the penalty will be for those that don't comply, or how millions of TV set transactions will be tracked and measured."The FCC can mandate manufacturing, but the FCC cannot mandate sales, " said Gary Arlen, president of Arlen Communications Inc. (Bethesda, Md. )."I have my doubts on whether the mandate is going to stick, " concurred Riddhi Patel, senior analyst at iSuppli Corp.(El Segundo,Calif.). "Some companies are already looking at creative ways to escape the mandate. ""Two major market drivers for HDTV and HDTV-ready displays in 2004 will be the aggressive role of cable and satellite companies and the consumer shift toward flat-panel TVs," observed Judith Abrams, principal at TechIntelligence LLC (Silver Spring, Md.). "The first rule of consumer electronics is that content sells hardware, and satellite and cable companies are stepping up to the plate with both." DirecTV and EchoStar are scheduling significant HD programming, she said, and they're offering hardware through more extensive consumer electronics partnerships than in the past. "The companies are bundling HD-capable displays [ranging from 27 to 52 inches] with HD set-top boxes for about $1, 000 to $1, 500. Similarly, cable companies are increasing their HDTV programming footprint and are selling more set-top boxes with integrated HD decoding. " Indeed, the cost of an HDTV tuner/decoder is also coming down. ATI Technologies Inc. (Markham, Ontario) is hoping to "surprise everybody" at the Consumer Electronics Show in Las Vegas this week, said director of marketing Mike Gittings, by introducing the industry's first single-chip solution combining a front-end vestigial-sideband/quadrature-amplitude modulation (VSB/QAM) demodulation block (for terrestrial and cable) and a back-end block for all-format MPEG decoder and format conversion functions. TV OEMs would have to add only a primary analog/digital tuner, SDRAM and flash memory, an interface slot for CableCard and physical interfaces such as the High-Definition Multimedia Interface (HDMI) and IEEE 1394. ATI estimates that the cost of a finished digital HDTV tuner/decoder product that includes all semiconductors, printed-circuit board and passive components will drop to $71 in 2004, compared with $167 in 2001-2002 and $116 in 2003.