The analog problem, what problem?
BusinessWeek’s Olga Kharif wrote a story today about retailers being fined for failing to post special labels on their analog-only TVs to notify consumers that, come next year, their TVs will stop working.
As far as I’m concerned, this is a non-event! People’s appetite for larger and cooler flat panels will continue as prices continue to fall and new features are added. Just look at Craigslist to see all the 42″ plasmas for sale with the comment “upgraded to a bigger set”. Look at all the CRT sets that people are begging others to take.
Strong sales of new TVs have nothing to do with the FCC’s magic date of 2/19/09. This problem will get solved by the cable providers (and to a lesser degree by IPTV and SAT providers). In fact - no one could be happier about this problem than the cable companies! Why? Well, two reasons…
1) Analog channels are sucking up valuable cable spectrum! The cable companies only offer analog channels because they are required to - based on legacy contracts that they made with the individual towns years ago. Each analog channel consumes 6 Mhz of bandwidth, whereas you can fit around 10 channels in the same bandwidth using Quadrangle Amplitude Modulation (QAM). Why is this important? More bandwidth for the cable companies means more channels, more phone services, faster data rates. There are approximately 78 channels of analog that now can be replaced with 780 (yes 780 channels of digital) or some smaller number of HD channels. The cable companies have been dying to orphan Granny and her old analog TV set and rent her a cable box for $10 per month and overwhelm her with new tiers of service. The only thing that has been preventing her from doing so - the FCC and the local cable commission. Well, now, the FCC has given them the license and the cable companies can’t wait!
2) With approximately 70% penetration of the 111 million US households - cable and SAT are looking for a catalyst for the rest of the market to buy their services. But people act for two reason: fear and greed. HDTV is one. After years of admiring my DLP, my father-in-law called to get me to install his 50″ plasma above the mantle in his retirement pad. We have crossed some chasm. Greed - check. Granny fears that Alex Trebeck, Katie Couric and that nice Regis guy with that perky girl could be leaving their lives soon. Well — here comes the bombardment of ads on how big cable or SAT company can make the world safe again and make sure that your friends enter your house every day (all for the low introductory price of $29.99 per month). Fear - check.
Will there be lawsuits, of course. Like soldiers holding out on an island at the end of WWII - there will be people that feel the public trust has been violated. Why should they have to go to their closest big box store and shell out $19.95 for a converter to extend the life of that 1982 Sylvania set? But ultimately, this will get all get sorted out. Why, because there is lots of money in it.
Let’s just hope Granny gets taken care of and that the lawyers don’t get too much of it.
