Cable companies contemplate killing analog (Indianapolis Business Journal)

Consumers fear price increases, conversion hassles

By Anthony Schoettle

A federal mandate will kill analog television broadcasts early next year, but it won't kill analog once and for all. How much longer analog will survive is largely a question for cable TV companies, and they're struggling with the decision.

The Federal Communications Commission is forcing all broadcasters—including locals such as WISH-TV Channel 8 and national broadcasters such as NBC—to stop broadcasting in analog and air only in digital by February 2009.

But that mandate doesn't affect cable companies, which can continue to convert the signal and pass it along in analog. As long as they do, cable customers with analog TV sets won't have to make any changes.

There are still 130 million TV sets in the United States connected to analog cable service, according to the National Cable & Telecommunications Association, a Washington, D.C.-based industry trade association.

Many cable companies are as eager to kill analog as the FCC is. As many as 12 digital channels can fit in the same space as a single analog channel. Killing analog makes room for more revenue-generating offerings.

Last month, officials in Comcast Cable's Philadelphia headquarters told USA Today that many of the company's markets would drop basic analog packages in favor of all-digital transmission by the end of 2010.

This month, local Comcast officials said there are no plans to end analog in central Indiana.

"That hasn't even been discussed for Indianapolis," said local Comcast spokesman Mark Apple.

Bright House Networks, a cable TV operator that serves 120,000 households in central and north central Indiana, plans to make the switch to all-digital by 2012.

Confusion in the minds of consumers over the switch from analog to digital has likely caused cable companies—especially Comcast—to soften their time lines for killing analog, said Ball State Telecommunications Chairman Barry Umansky.

Since Comcast is the No. 1 cable provider, with about 38 percent of the U.S. market, other cable operators are watching closely to see how it handles the transition. Comcast serves more than 250,000 households in central Indiana.

Transmitting in analog puts cable companies—which typically offer about 70 channels—at a competitive disadvantage. The five largest cable companies carry an average of 25 high-definition channels, while digitally transmitted satellite services DirecTV offers 95 and Dish Network has 64. Verizon's fiber-optic FiOS offering promises 150 by year's end.

Some cable companies may continue to offer analog, but analog subscribers could see a reduced offering so cable operators can conserve bandwidth. New York-based Cablevision recently pulled A&E, Animal Planet, E, SciFi, TLC and Travel Channel from analog-only service without reducing the subscription fee.

"For a cable network, our assets are our bandwidth," said Buz Nesbit, president of Bright House's Indiana division. "If we can put more cars on our information highway more efficiently … we can get more data transmission. It's pretty exciting from a technological standpoint, and we think it's going to be really good for our customers."

But Nesbit, who's been in the cable business three decades, knows there are pitfalls.

"The key is making this transition transparent," he said. "We have to deliver the highest level of technology in the easiest way for consumers. People don't want to read another owner's manual."

Comcast has made the move to all-digital in Chicago and other markets, and officials at the company's Philadelphia headquarters said 20 percent of the markets will be all-digital by year's end.

Fear persists among cable subscribers that service will decrease or the price will increase, industry experts said.

"There's a lot of confusion right now, and I think that's because the consumer doesn't have the whole story," Ball State's Umansky said. "I can tell you, just because you have cable, that doesn't mean there won't be changes. Eventually, there will be changes. And that's what consumers are worried about."