"The cable industry has a fairly limited time horizon to make decisions," said Bob Perry, director of marketing at Mitsubishi Digital Electronics America Inc. (Irvine, Calif.). "If not, cable may lose the most profitable households to other service operators."

An estimated 50,000 DTV receivers have been sold on the U.S. market in the last eight months, said CEMA president Gary Shapiro. "It is an extraordinary number, considering the extreme lack of programming."

Also at the summit, Aninda Das Gupta, chairman of the Advanced Television Systems Committee's DTV Application Software Environment (DASE) group, disclosed that a coalition of broadcasters, content providers, consumer vendors and broadcast equipment manufacturers will launch a set of interactive service trials based on the DASE and OpenCable standards, under a project called Flora. Describing the initiative as an effort to offer "meaningful interactive TV" that marries interactive data with TV programming, Das Gupta said, "We believe that this DASE standard will finally allow rich content at low cost with adequate security" for interactive DTV.

The project will explore a revenue-sharing model for broadcasters and DTV receiver manufacturers in four categories of services including e-commerce, documentaries, stock tickers and interactive sports. Das Gupta said the trials will speed not only the completion of the standard but a broader acceptance of the DASE specifications.

Content is at the top of the list of problems nagging DTV, and the dearth of high-definition TV broadcasts was much on the minds of summit participants. But other matters, both political and technical, are at issue too.

They include the dynamic-multipath problem that has dogged DTV reception via indoor antenna; the Federal Communications Commission's pending "must carry" decisions for the cable industry; the absence of an agreed-upon interface for connecting a cable set-top box with a digital receiver; and the lack of a standard that allows DTV to seamlessly merge with Web content, e-commerce and the Internet. On top of those is the high cost of DTV sets.

Compounding these problems further, Sinclair Broadcast Group Inc. (Cockeysville, Md.) confirmed that it will file petitions with the FCC as early as next week seeking government reconsideration of the ATSC's transmission standard, which is based on the vestigial-sideband (8-VSB) modulation scheme.

Sinclair executives would not discuss details of the petition, but industry sources said it appears to coincide with an FCC report, due for release shortly, detailing the agency's latest technical assessment of VSB.

Sinclair made one of the most significant public attacks on the VSB reception problem after its July transmission test directly comparing DTV reception via VSB and coded orthogonal frequency-division multiplexing. Results showed that multipath reflections particularly interfered with VSB-based DTV reception.

But most consumer electronics and broadcast executives, who have already made significant investments in the ATSC standard, vehemently disagreed with Sinclair's attempt to reopen the standards debate. Calling Sinclair's move "a political posture to derail" the entire HDTV process, Mitsubishi's Perry said, "We see no reason for considering changes in modulation schemes."

Stephen Nickerson, vice president of video marketing at Toshiba America Consumer Products Inc. (Wayne, N.J.), said 8-VSB implementation will improve. By reopening the spec now, he warned, "You open Pandora's box. So many self-interested groups will start finding things they are not happy about with the ATSC standard. Suddenly, it will be another 10 years," before a market emerges.

Broadcasters, too, oppose Sinclair's gambit. "To us, it seems that Sinclair's testing examined individual DTV receiver box performance rather than testing the quality of the modulation system," said Bob Seidel, vice president of engineering and technology at CBS. "We support 8-VSB," he said, adding that the industry "needs time to decide before even thinking about changing horses."

Neither are industry analysts convinced by Sinclair's argument. "Reports of the demise of 8-VSB are premature," said Gerry Kaufhold, principal analyst with Cahners In-Stat Group. "The future of 8-VSB as a transmission standard is now much brighter than it was before, thanks to breakthroughs by semiconductor companies such as Philips, Motorola, Microtune, Oren and NxtWave."

Where is cable?

Transmission issues aside, the most critical matter for the consumer electronics industry is cable compatibility. It remains unclear when the cable industry will start carrying HDTV programming and, if so, how their boxes will interface with DTV. Retailers today are unable to answer the question, Is my new HDTV set cable-ready?

"Our answer to that question would be, 'We are not sure, we are waiting for standards,' " said John Keating, director of merchandising at the Good Guys! chain.

Jim Palumbo, senior general manager of industry affairs at Sony Electronics Inc. (Park Ridge, N.J.), complained, "As far as cable, copy protection and connectivity issues are concerned, we are at the same place we were two years ago."

Most consumer vendors, however, said the lack of cable compatibility would not stop them from promoting their own DTV receivers. If the cable industry doesn't get with the program, some warned, there may be a backlash.

The cable industry nonetheless remains defiant on the digital must-carry issue, arguing that it represents an unconstitutional "taking" of property. "Cable is committed to carrying the digital programming our customers want to see, including HDTV," an industry spokesman said. "But we will never accept a policy that favors every broadcast digital signal over digital programming provided by cable networks."

Despite the stalemate, speakers at the DTV Summit said progress is being made on the content front. Noting that 80 percent of its fall prime-time programs are already broadcast in high definition, CBS' Seidel said, "When people say that there is no HD programming, I tend to disagree." The network also recently finished three-day coverage of the U.S. Open tennis tournament in HDTV.

HBO is providing to its cable and satellite affiliates 45 percent of its motion-picture offerings in HDTV. The ratio will increase to 60 percent by the end of the year, said Bob Zitter, HBO's senior vice president of technology operations.

There is no shortage of HD-format movies. Disney, for one, stopped transferring its 35-mm films to the analog NTSC and PAL formats last year, and now transfers new movies to HD. When combined with all the movies transferred by major studios, industry experts estimate that about 1,000 films are already available in HD format.

Among broadcasters, however, CBS and HBO are the exceptions. The amount of digital programming offered by other networks remains slim.

CBS is using cross-industry partnerships to build momentum for DTV. The network has teamed with Mitsubishi and Samsung, which underwrote the HD conversion of CBS' prime-time programs this fall.

While the possibility looms that today's digital TVs might prove obsolete if they turn out to be incompatible with cable, some industry studies show that most consumers remain unfazed. The studies also showed that consumers are keen for interactivity. "Consumers want not just one thing high-resolution pictures, but a whole package that includes interactivity," said Gary Arlen, president of Arlen Communications Inc. (Bethesda, Md.).

Although most networks are tight-lipped about their data broadcasting plans, Seidel said CBS plans to use "opportunistic data" over the DTV signal to offer CBS Internet services to viewers, while its affiliates add local interactive information.

"As soon as you cross-promote your programs with the Internet, no matter how big a server or backbone you build for your web, you'd break the system," he said. When 10 million to 12 million TV viewers rush to log on to the Internet at the same time, chances are that most of them will be put on hold. "We don't accept busy signals on TV," Seidel said.

Seidel also said CBS is looking into the Flora project.

Meanwhile, backers of the Wintel-led Advanced Television Enhancement Forum (ATVEF), a common content specification for HTML-based enhanced TV for satellite, cable and terrestrial broadcast, said here that their spec has been available since February.

With ATVEF, "If you want to start the business today, you can," said Patrick Griffis, digital TV strategist at Microsoft Corp. "The DASE spec is still in development."

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