A la carte cable programming vendor USDTV (Salt Lake City, UT) (www.usdtv.com) was in the news today with its announcement of converting their entire network to the more bandwidth efficient MPEG-4 compression model. This will make the small DTV programming distributor the first all-MPEG-4 network in the nation according to Brent Peterson, Sr. VP at USDTV.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

In reality, while the move to MPEG-4 is impressive, the feat wasn’t earth shaking because the company only has coverage in four major metropolitan areas, Dallas-Ft. Worth, Las Vegas, Salt Lake City and Albuquerque, with Norfolk, VA to come on line sometime this spring.

While MPEG-4 doubles the delivery bandwidth for the company, they have no immediate plans to offer HD programs beyond what the local broadcasters currently provide. " All cable channels will be delivered in SD" Petersen said, "but the door is still open for HD downstream." He also hinted that the extra bandwidth would be used for special programming offerings to the Hispanic market.

The company turned heads in 2004 when it began offering consumers specific choices in popular cable channel selection at cut-rate prices. The idea was to break cable and satellite TVs traditional and highly unpopular "good-better-best" pricing model (silver, gold, platinum package) that offers literally hundreds of unwanted cable channels at borderline monopolistic pricing.

The idea is to provide specialized cable channel content by broadcasting it directly to homes piggybacking its signal onto local broadcasters current DTV (ATSC) transmissions. This allows consumers to receive the content in their homes using a standard digital antenna and set top box.

In 2004 the company announced they teamed up with Chinese consumer electronics company HiSense, who provided $75M in funding to build 500K "over-the-air" set top boxes-currently for sale in Wal-Mart and other national CE retailers. The digital set top box sells for $99.95 and has value beyond the USDTV broadcast plan. A stand-alone unit can be used as a digital converter box for any analog TV to receive digital ATSC signals. Now the box is being upgraded from MPEG-2 to the more efficient MPEG-4 compression. Not a bad idea since the extra bandwidth can be used by USDTV to provide more choices, including a move to VOD services and an upgrade to a hard disk (HD) version box later this year.

But it’s not all smooth sailing yet. A key concern some analysts see in the USDTV model is the lack of traction in the nationwide deployment. And there are new competitive threats on the horizon as well. USDTVs original plan was to roll out the service to 29 major US markets in 2004 but the company came far short of that mark and two years later can claim only a hand full of markets-five to be exact when Norfolk comes on line.

Another issue faced by the company is Disney, which has announced a revival of its Moviebeam scheme using much the same architecture and infrastructure. While the Disney plan is a "trickle to hard disk" approach using very low bandwidth over NTSC analog signals from local PBS broadcasters, the analog signal is being phased-out and will have to shift to ATSC after 2009.

USDTV believes the competitive risk is low but the analog cut-off could put the company in direct competition with Disney and its partners, Intel and Cisco Systems, for precious digital bandwidth provided by local broadcasters. Moviebeam wants to deliver VOD services meant to replace DVD purchases with a direct-to-home model that others may follow.

Suffice it to say that USDTV is a company on the cutting (if not bleeding) edge of technology deployment. They (and predecessor WOW TV) pioneered the idea of over-the-air cable, using local broadcast of DTV to deliver a la carte cable channels directly to the home. In the process, they expanded the DTV transition with their digital set top box deal with HiSense and were first with a nationally distributed DTV to analog set top box that sells at Wal-Mart four under $100.

The announcement of moving to full MPEG-4 deployment is in keeping with this cutting-edge tradition. But time has demonstrated it’s a slow hard slog to get these metropolitan areas up and running. Let’s hope they can succeed in bringing some real price competition to the satellite and cable boys, perhaps forcing new and creative price / programming models that avoids the "500 channels but nothing to watch" syndrome. There may still be nothing to watch, but at least I’m not paying for all those channels. -SS