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Technology: HDTV- Ready For Prime Time

What's New in Technology

June 2005

Technology: HDTV- Ready For Prime Time

Prices have dropped and Americans are buying high definition (HD) TV sets in record numbers. Attracted by the design - a flat screen which can be mounted on a wall - as much as by the technology behind HD, consumers are purchasing HDTV sets like never before. Industry analysts report that, by the end of 2004, about 10 percent of U.S. households had a TV capable of displaying HD programming. As declining prices continue to drive sales, they believe that HDTV is poised to go mainstream in the near future. However, the HD segment is still in its infancy, equipment remains pricey, and the industry displays more than its share of anomalies. If you’re about to join the HD revolution, here are a few points to consider.

Perhaps the biggest surprise among consumers of this new snazzy technology is how few actually use it to watch TV. According to recent reports, a staggering two-thirds of the almost 13 million households with HDTV are not tuning in to HD programs. Most use their HDTVs to watch DVDs. Cost factors - the price of the TV set is often just the beginning of a significant outlay - and lack of HD programming (not all shows are available in HD format) seem to be responsible for this discrepancy.

Price Fatigue
There are additional costs frequently associated with HD reception, and some consumers just balk at further outlays on top of the $1,000 or more they’ve spent on the TV set. Some decide they are content with a cool-looking TV set that gets a better picture than the traditional analog set, and just don’t go for the extra spending required to enable them to actually watch high-definition TV shows. If you are reviewing the overall costs of HDTV, bear in mind that not all TVs tagged "HD-ready" come completely equipped for HD reception. Some require additional outlay for equipment, including HD tuners, in order to provide HD reception. Also, you might want to find out if you will need to spend more for pay-TV in order to receive HD programs.

HD Gadgets And Programming Lag
The number of HD programs continues to expand, but many shows are not available in HD. Expect this to change in the near future as satellite TV and cable providers try to one up each other by adding more HD shows to their rosters.

Your old analog-compatible VCR and personal video recorders can’t record in HD format. Manufacturers are launching new equipment to work in the HD spectrum. TiVo has a video recorder compatible with DirecTV’s HD broadcasts that can store up to 30 hours of programming, but, like all first generation HD equipment, it’s expensive at about $1,000. Major players in the video game segment are poised to introduce HD versions - Microsoft’s new Xbox will be playable in HD format - and Sony is expected to offer its next version of PlayStation with HD compatibility, too.

Why Bother?
Like it or not, HD broadcasting is slated to replace traditional analog signals - soon. The government is keen to see the industry take-off - and for the start-up revenue that will accrue from auctioning off the HD broadcast spectrum. Other players, including broadcasters, manufacturers, and pay-TV industry players have their own agendas. And, not surprisingly, consumers and their advocates don’t want to see traditional analog TV sets rendered inoperable. Balancing these various conflicting interests continues to generate a big debate. Some important deadlines on the countdown to HD have been set - although it is likely they will be revised:
  1. July 1, 2005 - the Federal Communications Commission (FCC) will begin to require that TVs measuring 36 inches (or more) be sold with digital tuners.

  2. July 1, 2006 - TVs measuring 25 inches or more must be sold with digital tuners.

  3. December 31, 2006 - Broadcasters will be required to switch from analog signals to digital broadcasting. There are some exceptions for communities that can’t receive digital transmission.

  4. July 1, 2007 - The digital tuner requirement will be extended to smaller TV sets and to personal recording equipment.
 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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