With digital TV coming closer, Lee McKnight of MIT's Center for Technology, Policy & Industrial Development and Robert D. Hof of Business Week discussed how it may change your TV -- and your PC.
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OnlineHost: Welcome to Business Week Online! Tonight's topic is the coming of digital TV -- will a TV set replace your PC, or vice versa? Or neither of the above? Our special guest is MIT lecturer Lee McKnight of the Center for Technology, Policy & Industrial Development (LeeMcKnigh). He's here with Robert D. Hof (RobHof) of BW in San Francisco, author of BW's Apr. 21 story on all this. Jack Dierdorff (JackBW) is moderator.
JackBW: Good evening to all of you on AOL. Welcome, Lee McKnight, and thanks for joining us this evening.
LeeMcKnigh: Glad to be here.
JackBW: And hi, Rob Hof.
RobHof: Nice to be here.
LeeMcKnigh: Hi, Rob.
JackBW: Rob, tell us what the FCC did that prompted you to write that story for BW on digital TV.
RobHof: The FCC on Apr. 10 granted broadcasters an extra digital channel on which to broadcast high-definition television signals. Now they have to figure out how to do that.
JackBW: Thanks, Rob. Now, you get the honor of tossing the first question for Lee McKnight.
RobHof: Bill Gates and the personal-computer industry want to make the TV more like the PC. Can they do it?
LeeMcKnigh: TV and the PC both have displays, both receive input which will now be digital, and both process digital signals, so they're not that different. Whether you interact with a remote control or keyboard is the major difference in the future. So, Bill Gates can do it.
JackBW: This question from our AOL audience comes from NutShell1 in New Jersey.
Question: Do you feel that in the future, when buying a computer, you'll also be buying a telephone, VCR, and TV (the merging of appliances)?
LeeMcKnigh: All those capabilities are almost available now in computers. Whether you as a consumer wish to have separate devices or one device in your home will determine whether some of these functions are in separate boxes or the same one.
JackBW: THonywell in Omaha has the next question.
Question: How soon will this take effect? And how much will it cost to the consumer?
JackBW: Ah, the cost question...
LeeMcKnigh: If you have to ask the price, you can't afford it. :) Seriously, estimates range from $5,000 to $10,000 for near-term prices for digital TV sets. How long it will take depends on Congress, the FCC, and the industry battle between PC and TV makers, as well as consumers. It will take seven years for digital TV to gain mass acceptance, and maybe longer. According to the budget agreement, the current TV channels are supposed to be given back to the government for reallocation by 2002, and since it will surely take a little longer than five years, seven years is still an optimistic estimate of how quickly digital TV will take hold.
JackBW: Longd13284 has this question from Tulsa, Okla. Is he right about the signal?
Question: Why should the general public be charged for the use of digital TV or phones since the signal is just out there for anyone to get?
LeeMcKnigh: There will be advertiser-supported digital TV, which will be available over the air at no additional cost. There can also be premium pay-TV channels, such as you get over cable now, broadcast through the air, for which you would have to pay. So, this could be the start of getting cable-like service without cable from broadcasters, because the broadcasters could broadcast four or five channels in the space of one or could broadcast high-definition TV movies or sports programs for which people are willing to pay extra. In any case, according to government plans, the consumer will buy either a new TV or a converter box early in the next century.
JackBW: Another money question, from OmegaStone, on the conversion to digital.
Question: What role will the government have in financing the massive cost it will take the networks and local stations to renovate their equipment to digital, or will it be accomplished by mandate only?
LeeMcKnigh: Some people are calling this a giveaway. The cost of each station transitioning to HDTV has been estimated at $3 million to $16 million. The FCC has mandated that stations in the top 20 markets begin to do what it takes to transmit digital TV within the next two years. So, the broadcasters may be able to earn more money by offering their spectrums for new services, which may help recoup the cost of investment. There is a problem for stations in small markets, and weaker stations in major markets, since the cost of this upgrade may exceed their market value.
RobHof: Lee, what will broadcasters do with this new digital spectrum? Will they offer real high-definition TV, or offer these extra digital services like paging?
LeeMcKnigh: The broadcasters fought hard to gain flexibility in the use of the spectrum. Other wireless service providers, such as personal communications service companies and cellular companies, as well as satellite providers of phone and broadcast services, have either recently entered or soon will enter the market as well. In the face of significant competition for revenue from wireless services, the broadcasters have the advantage of owning especially good frequencies, which are immune -- relatively immune, anyway -- to interference.
In different markets, broadcasters may find different service mixes their best revenue opportunity. For example, in major urban areas, if they can offer premium pay-TV channels or even advertising-supported channels, they could do well, but in less densely populated areas, but perhaps with major highways running through, using their spectrum for cellular phone or paging services may be quite lucrative. So it is very likely that different broadcasters, even in the same market, may offer different services -- TV, paging, and videoconferencing.
JackBW: The next question comes from Acheeran.
Question: Don't you feel the television and the PC are distinct cultural products that are always going to occupy different space within the home? Or do you think they are to be collapsed, to occupy one given space in the home?
LeeMcKnigh: What we call a TV will have computer-like properties. But we may still prefer to call the computer we have in our living room a television. We may also prefer to have another device, which we call a computer, in our study. Or we may come up with a new word for our digital display devices.
JackBW: A question about the government again, from MikeMerc.
Question: Has the government finished setting standards for digital TV, or are we in for more years of arguing and delay?
LeeMcKnigh: The Lee McKnight saying about digital TV, to paraphrase Yogi Berra, is it ain't over when it is over. So there'll be more lawsuits and regulatory hearings and congressional hearings and more lawsuits before we really know what digital television will be like in our homes.
JackBW: A slight diversion with this question...
Question: Lee, I see in the background info posted about you that you've written a book called "Gridlock on the Information Highway." If it's not too far off the subject, can you explain what "gridlock" you mean? Sounds scary...
LeeMcKnigh: The book's title is "Gordian Knots: Political Gridlock on the Information Highway," and it will be published in August or September of this year by MIT Press. We argue that the pattern of congressional and FCC and court proceedings, as well as industrial battles, which have shaped the communications industry in this country, have led to a gridlock that limits the use of information and communications technology in a way that harms our economy and society.
We argue that it is time to move to an open communications infrastructure which would eliminate barriers between broadcasting and point-to-point services and provide an integrated policy framework for all players.
JackBW: YumiPwr asks a bottom-line question posed by Rob's BW story. Lee, your view?
Question: Who has the edge in the competition? Computer industry or electronics (TV) industry?
JackBW: Then maybe Rob will want to add.
LeeMcKnigh: The consumer is comfortable buying TVs from TV manufacturers, but today more computers are sold in the U.S. than televisions. If the TV really becomes like the computer, then probably the consumer will figure out who knows most about computers. But if the standards settle around the preferences of the consumer-electronics companies, then those companies will win.
RobHof: Frankly, I think the PC industry has a long way to go before it comes up with devices that are as simple to use as the TV -- and that's what they have to do if they want any place in the living room.
LeeMcKnigh: People will not like the idea of having their televisions crash.
JackBW: Acheeran has a thoughtful question here.
Question: Domestic leisure culture has more or less defined the function and space TV occupies in the home, while the PC's function and space in the home has been defined by an office/work culture. Will these cultural factors hinder the merging of TV with the PC?
JackBW: A lot of people "play" on AOL...
LeeMcKnigh: Another factor that relates to this is the different distances one sits from a TV and computer. For computers, we're accustomed to being just a few feet (or inches) away, whereas for TV we prefer to be about 10 feet away. So with the factors of location and functional preferences, we may not wish to be 10 feet away from our computer, or two feet from our TV. However, as was mentioned in the BW article, the computer industry plans to build television capabilities into most computers, which will be in both the office and home. Speaking from personal experience, it isn't uncomfortable to watch TV in a window on a computer from a few feet away. We may still be close to the computer and use it for business multimedia, and we may still stay 10 feet away from the computer in our living room, which we'll use mainly for entertainment multimedia -- and sometimes for a big display to balance our checkbook.
JackBW: Mera house has the next question.
Question: How will stations that took up to eight years to convert to stereo be willing to convert to digital in such a short period of time and such a high cost to them, especially in smaller market areas?
LeeMcKnigh: The Congress and the Treasury are counting on the money from reselling the broadcasters' existing spectrum to help balance the U.S. budget. So the stations will face the legal prospect of either switching and investing in digital televsion, or going out of business. You make a good point, however, since courts and legislators may be sympathetic with broadcasters in rural areas, and may give them a longer grace period than is in the current FCC plan.
JackBW: BeanTownM5 (in Boston) has a bottom-line question from the consumer viewpoint.
Question: Will we be able to use digital TV with our existing TV sets?
LeeMcKnigh: If you buy a converter, you can keep your TV. The converter could cost as much as a current TV, however. Estimates range from $150 to $350 for a converter.
JackBW: BeanTownM has another question -- a very basic one we haven't answered yet.
Question: How is digital TV better than analog? More channels? Better picture? Better sound? Cheaper?
LeeMcKnigh: Yes. Digital TV may not be any better than existing TV. You'll get the same programs and commercials, and if you're sitting on a couch 10 feet away with the same size screen, you may not see the difference. If digital TV opens the door to a new generation of interactive services, which you value, and uses the spectrum more efficiently -- which it will -- then we will all benefit.
JackBW: Wnbailey asks the next one.
Question: Why set a standard for HDTV terrestrial broadcast at all when most households have CATV connections that require no use of the broadcast spectrum?
LeeMcKnigh: Broadcasting, according to Congress and the public, plays a special role in ensuring universal availability of news and entertainment, without regard to one's income. Cable TV is only subscribed to by around two-thirds of U.S. households. If broadcasters could not upgrade to digital services, as cable and satellite providers can, then a third of American homes would be information have-nots.
JackBW: Here's a question relating the digital TV issue to the Web.
Question: Do you think the Web as we know it today really would work on the TV? Don't we need the next generation of Web programming before it's the "Info Superhighway"? I just can't see HTML cutting it for the masses.
LeeMcKnigh: WebTV -- the company that Microsoft recently bought -- is attempting to make it in the home today without the benefit of high-resolution digital displays. New "push" technologies enabling the Internet to look more like TV broadcasting are already gaining popularity and may enable consumers in their homes to get TV services over the Internet comparable to their existing services within the next five years. Right now, however, I would not throw away my TV for the entertainment services availabe over the Internet.
JackBW: Here's another basic question we haven't specifically tackled as such.
Question: Are HDTV and digital TV the same thing?
LeeMcKnigh: The terminology for future TV services has changed several times over the years. People spoke of high-definition, improved definition, extended definition, advanced television, and now, digital TV. When we actually get it, we may just call it television -- or we may have another word for it. Some of these terms defined the future service as having higher resolution, some emphasized slightly enhancing the existing service, some emphasized enabling a broader spectrum of services. Digital is perhaps a more neutral term, because we don't know what digital TV could be currently, but it is digital, and could do many things, just as computers can.
JackBW: Bbdealers has another question about digital TV and the Net.
Question: How will the digital TV age change the shape of the Internet and working at home?
LeeMcKnigh: It could lower productivity. It could do that by making it easier to switch to Oprah from your spreadsheet. It could also act to provide a rich range of services for the telecommuter to enhance the productivity of the home worker.
JackBW: ANagle3 in Elk River, Minn,. asks our final question.
Question: Do you ever think that TV computers will replace regular computers?
LeeMcKnigh: They will, starting next year. It will be normal to have TV ability in a computer, as it now is normal to have a CD-ROM in a computer. This assumes that the standards ultimately be defined for digital TV to take advantage of the capabilities of computers -- that is, support progressive scan displays, which allow people to read text on the screen without getting headaches or feeling nauseous. Sorry to end on that note, but...
JackBW: Thanks to Lee McKnight of MIT for being with us tonight to discuss digital TV and what it will bring to our home screens -- whether TV or PC or a blend.
LeeMcKnigh: Thanks for the questions and the chance to interact with all of you. I wish you good luck deciding when exactly and what exactly to buy for your living room.
JackBW: Rob Hof, I appreciate your being along for the ride.
RobHof: Thanks, it was fun.
LeeMcKnigh: Thanks also to Jack and Rob.
JackBW: Transcripts of this and all BW Online conferences and chats are available soon after the event. Look under Talk & Conferences on the BW Online opening screen. Thanks again, and goodnight to all!
Copyright 1997 by The McGraw-Hill Companies, Inc. All rights reserved.
