HDTV roundtable Developments and stumbling blocks with HDTV

HDTV roundtable

HDTV Roundtable HDTV roundtable Developments and stumbling blocks with HDTV CSI held its second roundtable on March 1 2007, this time focusing on the growth of high definition television. Executives from Intelsat, Scientific-Atlanta, Harris and Tektronix joined chairman Chris Forrester to discuss the current HDTV landscape in Europe, and explore how HD adoption - from the studio onwards - is evolving across the region. Market drivers and challenges, the competitive landscape, technology issues, the role of audio and future developments were all topics touched upon by the panel. Chairman: Chris Forrester London-based Chris Forrester is a respected technology journalist. He reports on all aspects of the TV industry with special emphasis on content, the business of television and emerging technologies. This includes interactive multimedia and the growing importance of webstreamed and digitised content over all delivery platforms including cable, satellite and digital terrestrial TV as well as cellular and 3G mobile. He has been investigating, researching and reporting on the socalled broadband explosion for some 20 years. page thirty two Jean-Philippe Gillet regional VP, Europe, Middle East, Intelsat Jean-Philippe Gillet is responsible for leading and managing Intelsat's regional sales in Europe and Middle East. Prior to joining Intelsat, Gillet was VP of international sales for Globecast North America, where he was responsible for the strategy, development and sale of Broadcast Video Services. Prior to Globecast, Gillet was the sales and marketing manager for France Telecom. Gillet received his Master of Science Information Technology from Ecole Superieure de Commerce de Niece. www.cable-satellite.com Tim Sheppard senior business development manager, ScientificAtlanta Europe Tim Sheppard is responsible for S-A s broadcast market strategy in Europe. Sheppard's expertise is in the digital TV business and new technologies such as advanced video compression. Prior to joining S-A, Sheppard held a number of senior roles at Tandberg Television. He began his career as a software developer at ICL (later Fujitsu). Tim graduated from Reading University with a Bachelor of Science, Physics and Mathematics. Dave Dougall VP of sales, EMEA, Harris Dave Dougall works in Harris Broadcast Communications Division, based in the European headquarters in the UK. Dougall has more than 20 years of product sales and marketing experience. He worked for the Leitch Business Unit as technical sales manager and later as director of sales and marketing. Dougall also served as R&D Engineer at Sony. Dougall holds a First Honours degree in communications and electronic engineering from Napier University in Edinburgh. Winfried Schultz video marketing manager, EMEA, Tektronix Winfried Schultz focuses on market development and marketing communications for video and audio test products. Schultz previously managed Tektronix' network of video test resellers in Europe. Prior to Tektronix, Schultz worked in systems integration of private mobile radio systems and emergency call center solutions. Schultz holds a degree in Electrical Engineering from the Fachhochschule Hamburg, Germany. Cable & Satellite International march-april 2007

Chairman: From your companies' point of view, where are we on the HD roadmap at the moment across Europe? Jean-Philippe Gillet: On the satellite side, we see a lot of the largest European broadcasters interested in launching HD channels to reach DTH platforms and cable networks. We are also trying to take advantage of the services we provide for the existing US broadcasters, like we have done for Discovery Communications. We think that in terms of satellite distribution, the European market is a couple of years behind the US. So we do see interest but think it could be faster, and we feel it will pick up when viewers are more equipped. broadcasters committing to HD sooner than expected. What is driving the industry is that high-level board decisions are now being taken, some of which are beyond current technology; discussions about 3Gbps transition and 1080p/50 full HD. On the cost side, broadcasters are looking at total cost of ownership. In German speaking countries, public broadcasters will all go HD, but their biggest concern is in the aftermath. With distributed architecture everywhere, a high level of producing content in-house and the need to upgrade studios stage design, it comes down to things like HD make up - for them, it's primarily a simulcast proposal and they're struggling with the additional cost. being the most aggressive in offering HD, both in the US and Europe, because they have the bandwidth. That then drives the cable and IPTV operators, who see HD as a key differentiator, offering a limitless number of HD channels provided they can get the last mile bandwidth. Some IPTV players are typically going for HD from day one. Terrestrial operators tend to be lagging, but this is also changing Chairman: Do you sense your clients are taking time because the consumers need more education? Do you think consumers are buying into flat panel technology, but not necessarily buying into HD? In other words, is the consumer really driving the market? Dave Dougall: From a studio perspective, Western Europe is all-hd and we don't see anyone putting in SD systems any more. Even across the board in EMEA, they're all looking for switchable or upgradeable equipment. From OB trucks to studios, everyone is talking about HD, even in the most remote places, such as South Africa. In the Middle East, studios want the systems now, asking us to re-quote for systems that are HD upgradeable. To this end, Harris is developing products with HD in mind because with studio production, where you're looking at ten-year investments, equipment has to be upgradeable and HD-ready. And we see broadcasters in some markets bypassing conventional standard digital; for example, Saudi Arabia went from C-CAM to HD. Where we are seeing SD being sold, however, is in smaller infrastructure that's an add-on to existing systems, where cost is a major concern. This is because a price premium still exists between SD and HD - typically, you're still talking 15-20% more for HD systems. Winfried Schultz: In our view, what we see is that with the big hype last year, driven by the football World Cup in Germany, this is potentially the year of taking a breath. Having said this, we see more announcements from German Tim Sheppard: We're very focused on HD and think it's a major growth area for both areas of our business - the headend transmission side and the set-top box side. If you look at the production side, which is an investment protection issue, I see a big move towards HD production with prime content because they want it archived for the future and there's no point producing in SD any more. On the service and operations side, HD is for the moment a premium service, in the sense that it's about content such as football, but also in that it's driven primarily by pay TV operators who are trying to get high ARPU customers. There is also the competitive scenario - the domino effect. Until you get critical mass with competitors, you don't get urgency among operators to roll out HD services. I've seen this happening now in several countries across Europe. Satellite is probably leading the way in terms of Dave Dougall: My opinion is that content is more important than quality. What will happen is that there will be a domino effect. I think once consumers start seeing HD quality and start getting used to it they won't accept SD or upconverted material any more. This will create a snowball effect In German speaking countries, public broadcasters will all go HD, but their biggest concern is in the aftermath. For them, it's primarily a simulcast proposal and they're struggling with the additional cost. where the consumer will be keener to take up HD. All content today is being driven by sports and movies, and once consumers become more exposed to premium HD content they will demand that all content is HD. Tim Sheppard: Consumers will also notice a stark contrast when HD DVD arrives. One of the HD drivers right now is an 'impress the neighbours' type of factor; similar to what happened with flat screens. So I do think HD is partly about the label and not totally about perceived quality. I think a lot of people are less worried about the technology than the impact on their lounge. Cable & Satellite International march-april 2007 www.cable-satellite.com page thirty three

Winfried Schultz: I agree. I think the key point here is that consumers don't have a benchmark. Most people haven't seen HD. They have sometimes seen DVB-T on a 50- inch plasma screen and assume it to be HD so educating the consumer will be important. I think it will happen once Blu-ray and HD DVD become available and people will realise how good TV can actually be. A recent survey in the US found that 94% of people who have been exposed to HD find it annoying to go back to SD. Chairman: What are second-tier broadcasters doing about HD? Most of them depend on a diet of acquired programming, so are they even beginning to think HD? Dave Dougall: They are thinking and talking about it, yes. If you look at shopping channels, HD will help them package their goods better, but HD today is not as important to them. Hopefully, they will look at upconverting their material. Tim Sheppard: Upconversion is an option, and if an operator wanted to offer an all- HD service they'd have to look at some upconverted channels. How long it will take for the long-tail content to get converted to HD is highly unclear. The point is that the channels that people pay for will go HD, which will sufficiently drive the market and lower costs. Dave Dougall: Tier 2 broadcasters may ask why they would even be interested in buying digital equipment when they can just buy analogue. But they don't because there is a perception that people want the latest technology. In addition, reliability of services and equipment is a critical factor because most broadcasters are in it for the long term and are looking to secure their future investment. Tim Sheppard: Set-top boxes are still a challenge, but a threshold of numbers will change this. The next Olympic Games on top of a core bouquet of services and key channels will drive volume on the boxes, and certainly the price of HD STBs is coming down already. Chairman: What's a mass-market figure of HD subscribers that will create a groundswell? Jean-Philippe Gillet: I'm not sure there is a mark that will make a difference. There is a financial aspect and a perception issue. There will come a point where as a broadcaster you have to go HD and cannot afford not to be seen going that way. Before viewer figures push HD, it will be the competitive element that pushes broadcasters to HD. Tim Sheppard: The main stumbling block that's holding HDTV back is the availability of content. Commercial TV stations that rely on advertising as their sole source of revenue have a business case that's less obvious. It's not clear that the increase in advertising revenue as a result of going to HD will make up the numbers needed for conversion and so on. Chairman: When will HD replace SD for most mainstream broadcasting, whether in the pay TV environment or the public sector? What date do you see that tipping point being reached? Dave Dougall: I would say think of a number and halve it because it will happen sooner than the industry thinks. The groundswell is growing in production to the extent that content is being produced with a view towards long-term investment protection and revenue maximisation. With technology in general, replacement cycles are becoming shorter all the time and it wouldn't surprise me if the HD tipping point is reached in five years time. Winfried Schultz: I share this perception that it will be faster than most people think. The London Olympics in 2012 will drive a big push in the UK specifically, while Africa will benefit from the football World Cup in 2010. The situation is that HD will be driven by major incidents from a consumer take up point of view. Whether broadcasters are reacting to this is a different story. Certain broadcasters across Europe have been producing in HD at the set for some years now. Some have dormantly been building an archive that can be used once the investments are made in the infrastructure, which is now happening as a result of competitive forces. Jean-Philippe Gillet: The switch to digital terrestrial TV will be a factor that's going to push HD in my opinion. In France, there is a clear roadmap and a defined standard that will ultimately act as a driver. Ultimately, all of the main channels will have to be distributed in MPEG-4 and the viewers will start receiving a better quality picture. I think once digital terrestrial is MPEG-4 based, everything else will have to be HD. All broadcasters, whether commercial or public, in France share the same strategy of focusing on distributing prime channels in HD. They are preparing for HD now and will be ready for distribution when the market is ready. Tim Sheppard: Most broadcasters that I meet, certainly on the satellite side, are held up by the availability of content, rather than by their enthusiasm. Technology issues have largely disappeared and it's now a question of producing more content in HD. By 2011, most western European page thirty four www.cable-satellite.com Cable & Satellite International march-april 2007

HDTV Roundtable countries will have switched off analogue. Indeed, there are some eastern European countries that are also very keen on HD. Winfried Schultz: To me, it's not as clear cut as that. I see DVB-T in some places being set up as a competitive path to the customer. Other places look at different approaches, such as mobile TV. The key element that is potentially determining DVB-T long term is that we have expensive 3G networks with little traffic. I would say that mobile operators might start looking at DVB-T infrastructure combined with the emerging 'my TV' generation. Chairman: In terms of content, where does news fit into the HD portfolio? Dave Dougall: Surprisingly, we do have a few clients conducting feasibility studies on HD systems for news, perhaps as a competitive response to Al Jazeera's commitment to an HD studio. It's happening but more slowly because the same drivers don't exist where content is king. Once again, it's a case of once viewers watch the news in HD they won't accept it any more in SD. Tim Sheppard: HD is clearly unstoppable now and the argument is more about which channels are going to go HD when, how they will be bundled, how they will be charged and what kinds of features will be placed inside the STB. In terms of IPTV, we see that the combination of our HD STBs with PVR functionality are the most in demand due to the extremely compelling proposition and user experience created by the combination of HD and PVR. Winfried Schultz: Major broadcasters like ZDF in Germany are more focused on repurposing their content over the Web. They consider the transcoding of content across multiple platforms as a subscription service or podcast service on the move as more compelling and a potentially greater revenue generator than HD. In our experience, there is less focus in news Cable & Satellite International systems on HD. After all, as long as news content is live and relevant, people don't care about the quality so much. Having said that, I agree that competitive pressures may change that. Chairman: Where does HD fit in terms of compression and hybrid services? How much more can we expect in improvements to the MPEG-4 algorithm? Jean-Philippe Gillet: On the satellite side, because all our customers have different types of requirements, we try to offer flexibility. These requirements can range from 24Mbps for the distribution of an HD channel to as low as 10Mbps. We may need anywhere up to two years from now before there is a clear standard for distribution. Until then, we have to see how our customers are evolving. Obviously, the more you transmit the more it would cost, so there is pressure to reduce the bandwidth used to distribute HD channels and the pressure will only increase. Right now, there is a limited availability of MPEG-4, which will take time. This extends to aspects such as troubleshooting, where MPEG-4 is not robust enough compared to the MPEG-2 standard. We also see DVB-S2 coming, because it helps limit costs by transmitting more bits on the same Mhz. If broadcasters find a march-april 2007 way to distribute HD content at a reasonable cost, this will then drive other customers to move towards HD. If you'd asked me in 2004 if we'd still do the vast majority of services in MPEG-2 the answer would have been a categorical no, but the reality is that and there are not enough STBs on the market, so it's taking longer than we anticipated. Tim Sheppard: You have to distinguish between the contribution stage and the final emission to the customer. Most of the MPEG-4 encoders have been targeted primarily at the end-emission, aiming for lower bit rates and shortcuts to make a low-bandwidth but still good quality picture. In that respect, the MPEG-4 progress over the last year has been staggering. Most vendors were saying MPEG-4 will be 3050% better than MPEG-2, while they are now saying it will be 50-70% better. We are seeing 8Mpbs transmission and even lower in the final path at significantly improved quality. On the contribution side, some technical barriers do remain. The 4:2:2 profile, which is typically used in MPEG-2 contribution networks, is not implemented in any decoding chipsets and that creates practical limitations on producing cost affordable, professional receivers. This limits MPEG-4 to distribution applications www.cable-satellite.com page thirty five

where there's not so much post-editing required. The second issue is that none of the main vendors have created encoders specifically aimed at contribution as they aren't focused on that part of the market yet. For high quality HD contribution, you typically need 50Mbps+ in MPEG-2 and 20Mbps+ in MPEG-4. We commissioned a Europe-wide survey of broadcasters and terrestrial network operators, which found that they would have 16% of their content contributed in HD within three years. Most respondents said it would probably be in MPEG-2 format, but MPEG-4, JPEG2000 and uncompressed also featured. Dave Dougall: For the production studios, this isn't an issue and the debate we hear from them is the timing of 1080p/50. Tim Sheppard: With 1080p/50, you need to extend the encoding capability to cope with the number of extra frames. It's fundamentally the same algorithm so it's not too difficult to achieve on the encoder side, but the question is whether you have a cost effective decoder. What is certain is that 1080p/50 would be the perfect format for contribution and distribution. Winfried Schultz: We think people would love 1080p/50, but are hesitant in certain areas. Recent research on picture quality found that even at lower bit rates 1080 50p produces better picture quality than interlaced, the progressive original allows for harder compression or better picture quality to the home at the same bitrate. Tim Sheppard: The actual bandwidth increase to 1080p/50 is not as much as people might think because progressive is an efficient format to compress so it would work quite well, but there's a lot of infrastructure to put in place before 1080p/50 becomes available. Even now, one can argue that 720p would be a more efficient and better profile to transmit, but the majority broadcast at 1080i because of the content. Dave Dougall: That's right. Studios aren't investing in 1080p/50 solutions because they have to make purchasing decisions constrained by budgets. Tim Sheppard: Most pay TV operators are equally pragmatic in their outlook and if they can sell HD at 1080i or 720p, they will. This will limit how much 1080p/50 actually gets broadcast despite the fact that the chipsets are becoming available and there are some 1080p/50 TV sets out on the market. Even with these sets, however, it's all about upconversion and frequency rate conversion and it's been clear in the last few years that the quality of different screens has varied enormously directly as a result of the upconversion process. Ultimately, 1080p/50 will remain a niche in the next ten years. Chairman: In this respect, are some broadcasters taking the easy way out by overcompressing? Tim Sheppard: Some operators have been making those shortcuts in MPEG-2 for years, resulting in digital channels that look worse than analogue. With HD, however, broadcasters have focused on the fact that it's a premium service that needs to be of premium quality. Sky, for example, is broadcasting at high bit rates. There are some IPTV operators that have taken shortcuts because they have to, being limited by the DSL pipe. Chairman: Given these bandwidth constraints, how can cable and telcos match what satellite is doing, as well as what might potentially be available in some markets over digital terrestrial? Will cable companies and telcos suffer with HD? Tim Sheppard: It varies significantly by cable operator. A lot of cable companies do have a bandwidth problem, because it is being soaked up by different applications such as HDTV, broadband and VOD. They have a couple of techniques they can deploy to counter this, including moving the nodes closer to the home and switched digital video. As the volume of HD channels increases in the next three years, cable companies will have to upgrade their plants and networks. Moreover, with quad play added to the mix, where do they place the highest priority? It's a difficult decision for them to take. Chairman: Does this put some markets such as Scandinavia, where there is heavy dependence on cable, in a secondary position for the rollout of HDTV? With 1080p/50, you need to extend the encoding capability to cope with the extra frames. It's fundamentally the same algorithm so it's not too difficult to achieve on the encoder side, but the question is whether you have a cost effective decoder. page thirty six www.cable-satellite.com Cable & Satellite International march-april 2007

In the Middle East, studios want the systems now, asking us to re-quote for systems that are HD upgradeable. Tim Sheppard: There is less pressure on companies to move towards HD in those countries or regions where there is one dominant technology. HD has moved quite fast in the UK, for example, because terrestrial, satellite and cable are pretty well balanced, and now IPTV is in the mix too. Chairman: What are the challenges in taking HD forward? What will lead it to see a speedier take up by broadcasters, studios and consumers? Jean-Philippe Gillet: One of the key challenges for broadcasters is found in deploying technology that will not become obsolete in the short term. On the transmission side, there is no clear view on what that technology will be, which makes broadcasters concerned and hesitant in making investments. Dave Dougall: In a studio environment, it's purely about getting the budget available and upgrading the systems to HD. So it will be a piecemeal approach from a content production perspective because there aren't many Greenfield sites out there. The question here is about what parts to upgrade first and tying the whole chain together. Transmission wise, output can be upconverted for $40,000-$50,000 and one of our products actually allows for upconversion for $20,000. But the real limiting factor is distribution. Chairman: Audio is an important part of the HD mix - how do you see audio figuring in the equation? Winfried Schultz: Research shows that you can get away with lower picture quality if you deliver better quality sound. And the good thing is that while sound is important it is also a lot cheaper in the transmission because it takes up significantly less bandwidth. We are seeing multi-channel surround sound transmissions as extremely important across Europe. It is extremely important for the European audio market, which in the analogue days was highly fragmented, to begin carrying embedded audio. Thankfully, we are seeing a lot of movement towards this approach, and it promises to become a tidal wave. Tim Sheppard: Audio is often forgotten even though it's synonymous with HDTV. When MPEG-4 compression was introduced, audio suddenly started to become important on the bandwidth because it takes up a larger percentage, particularly when you go to 5.1. What's also often forgotten is that audio compression standards have probably improved more than video compression in the last few years. Dolby Digital Plus and High Efficiency AAC have seen more than 50% improvements in terms of bit rate compared to MPEG-2. Winfried Schultz: One of the biggest obstacles I see for HD is the fragmentation of formats and standards. If we can get to some sort of level playing field and make the decision as to where we want to go, then HD will pick up much faster. Tim Sheppard: Because there's so much more variety of options with audio than video, we're building in five or six audio standards into the same box - different varieties of Dolby, AAC and MPEG audio. Chairman: Do you think the industry will be looking for ultra-hd ten years from now? Tim Sheppard: Innovation in the next ten years will be more about interactivity, content anywhere, personal TV; fragmentation if you like, and different ways of delivering it, rather than the format of the TV. There is some work around true 3D that's being discussed, but pragmatically I don't think that will be for another 20-30 years. With HD, maybe we will argue over a few more lines or frames, but there won't be a quantum leap. To all intents and purposes, HD will be the topof-the-range broadcast standard for the foreseeable future. Jean-Philippe Gillet: CE manufacturers are going to try and push a new technology because their job is to sell new equipment, and I'm sure they will expand huge marketing efforts to push a new product. Tim Sheppard: It's going to have to be something that's backward compatible; I can't imagine simulcasting additional HD signal alongside a true 3D channel. But there are ways - and some companies are suggesting this - of helper signals where you get a pseudo 3D effect by sending a parallel stream. On the satellite side, all our customers have different types of requirements, ranging from from 24Mbps for the distribution of an HD channel to as low as 10Mbps. Dave Dougall: Long before broadcasters looked at HD, companies used early HD systems purely for product launches such as cars. So I can see ultra-hd or 3D revolving around niche projects, but it won't become a mass-market proposition any time soon. Will there be a new technology? I certainly hope so. Tim Sheppard: The question is whether that new technology will be a new HD format or something completely different. Cable & Satellite International march-april 2007 www.cable-satellite.com page thirty seven