Reality Has Never Been So Real

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
January 23, 2006

It is now official that, barring further Congressional action, analog television is scheduled to vanish right after the 2009 Super Bowl. As I wrote last year, this is not such a bad thing except for Congress wasting vast quantities of money on subsidized converters boxes.

For the past month, I have sampled HDTV as it is currently offered by my local cable company. Given the increasingly popularity of this site, I will be intentionally vague about many details so that a popular search engine does not turn this site into the place where people with questions about their sets come to look for information. This site is already getting crowded with folks looking for reviews of outlet malls.

I first saw HDTV in a retail electronics store in Southern California just after its initial roll out (LA was among the first markets to get it) and was wowed by it. I knew that there was no point getting a set because it would be years until it came to upstate New York. I never did actually get a "set," but the big LCD monitor that I purchased to scroll around giant databases conveniently comes with a DVI/HDCP input that connects to an HDTV cable box no more complex than my old digital cable box. I was going to wait until I got all of my important business out of the way during the holiday break before going to the cable company's storefront and obtain a new cable box until I found out that the HDTV boxes disappeared almost as fast as XBOX 360 consoles. I also figured out that it is unlikely that I will ever get caught up.

There are two wonderful things about HDTV. First, it makes traditional TV look so bad that I have stopped watching old TV entirely. I still have CNBC on my "favorites," but it looks plain awful—partly because it is (who let Jim Cramer take over the station?) and partly because my "monitor" does not have the circuitry necessary to "optimize" non-HDTV content. As a result, the time I spend watching TV has plummeted from minimal to negligible. (I do listen to the canned, surprisingly high quality, classical music on my cable system almost constantly, but without any picture.) Second, special-purpose HDTV stations carry a variety of "eye candy" programming that would never show up on TV otherwise. Most of it requires a pre-comatose state of mind—one I had better be a few decades away from achieving—to appreciate fully. Some of it is borderline amusing. Given my blazingly short attention span, this programming does not take up much time. I can now go through life knowing that I watched thirty seconds each of sumo wrestling, rugby, and some weird form of boxing that is done in cages. There are all sort of concerts in HDTV, too, some of which have hooked me for close to five minutes. I never knew that The Pixies got back together and they seem less edgy out of context. Perhaps Black Francis can come and give a guest lecture in one of my finance classes. (Yes, this is the commentary that will appear during the first three weeks of classes during the Spring 2006 semester, so maybe I can scare off some students, assuming they find this site.)

I just have the barebones HDTV package, so I don't get those cable channels that provide other types of "nature programming" that may well look worse in higher resolution. As it is, I once tuned by Roy Firestone interviewing someone on an unusually vivid high-definition show (I suspect that it was shot in digital video at the native resolution of my monitor and that my cable company forgot to compress it) and I am now convinced that there are some things that look better in low-def.

Apparently, many buyers of HDTV-ready sets have no problem with low-def programming. In any reasonably sophisticated home theatre set-up there are literally thousands of ways to get a monitor, A/V receiver, and cable box to talk to each other and many of them do not yield a high-def picture by anyone's standards. Non-technically inclined individuals, including a good chunk of technicians working for cable companies, are likely to be happily watching their sets in one of these low-def configurations.

Anyway, I am writing about HDTV because it is clearly an important driver of technology and that sort of thing matters for the economy. In the old days, the FCC would have simply decreed how the new kind of TV would work, but in post-Reagan times the market (with the help of Congress) gets to decide what happens. There is no telling what will happen. I am not complaining, but one result of this is massive interim confusion.

Much of the confusion comes from there being two existing flavors of HDTV (720p and 1080i) and an emerging one (1080p) that could win eventually even though no real content is currently available for it. There are also various flavors of enhanced TV, including the 480p format that most DVDs and DVD players can produce. (Old analog TV is a lousy form of 480i, and you can find out what all these numbers and letters mean from some other site if you do not already know.) There are many competing display technologies and, depending on their native resolutions, some displays can do some types of HDTV better than others.

The dirty secret about HDTV is that the signals currently being broadcast are sufficiently compressed that the picture that people with even the best sets are currently receiving (good as they are) fall far short from what HDTV is capable of. The problem is the bandwidth that full-fledged HDTV requires. There is also an abundance of low-def programming on high-def stations. Those stations are easily identified because they do not have a lot of penguins, polar bears, and sumo wrestlers wandering about on them.

Immediately after Christmas, my cable Internet connection started to act up and would become unusable during evenings and weekends. My cable company refused to discuss what was going on with me, but I noticed that three "scheduled maintenance events" appeared on their system status page. After the events my Internet service as almost back to normal; however, compression artifacts were more frequent on my HDTV channels. (The most typical compression artifact is an unnatural "blockiness" to the picture.) My guess is that all the new HDTVs (including mine) had overloaded the system and that the cable company's solution was not so much to add more capacity, but to degrade the cable signal further.

While the optimal configuration of networks for the transmission of high-bandwidth signals is a problem that me and my techie friends can solve in our sleep, it does seem to challenge my local cable company. The real question is does it challenge Cisco, who not only makes network routing equipment, but also most of the cable converter boxes as the result of a recent acquisition. Indeed, HDTV presents a golden opportunity for both Cisco and the cable companies (and maybe even the phone companies). Getting a full 1080p signal over the airwaves to a TV set is not something that (as I understand it) is possible with the bandwidth that the FCC has allocated to the new digital TV stations that are displacing the old analog ones. With fiber optic cable and a reasonable routing algorithm, mind-blowing video can be piped into every home worth running cable out to.

And now here's some bad news for Hollywood and anyone hoping to pipe really nice TV pictures to people. If you took most normal people and showed that a DVD (converted from film) on a big-screen TV, they would think that it was true high-def. There is no question that 720p and 1080i content on cable look better than a 480p DVD, but not vastly better. As it is, there are two competing formats for the next generation of high-def videodiscs, but if the typical consumer cannot really tell them apart from a standard DVD, the rate of adoption could be even slower than expected.

Copyright 2006 by Miller Risk Advisors. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to www.millerrisk.com.