Published by: Larry Bloomfield & Jim Mendrala
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January 18, 2001 

Tech Note – 070 

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Subj: Reader Responses – A chance to voice your opinion 

From: David Sparks and the entire 'Hardware' and 'IBC Daily News' teams

A belated congratulations on a great Tech Notes #69 - and on your 4th anniversary. I remember with 'Prompt!' how numbers very quickly get out of hand!

Good luck for the future - and all the best for 2001.


Subject: Digital Cinema 2001
By: Jim Mendrala

NIST (National Institute of Standards and Technology) and NISO (National Information Standards Organization) sponsored a two-day conference, January 11th and 12th, in Gaithersburg, Maryland on Digital Cinema. Both sponsors are part of the U.S. Department of Commerce and both are non regulatory agencies of the government. The theme for the conference was “A New Vision for Movies”. The conference took place in the Green Auditorium on the NIST campus.

Charles Fenimore of NIST was the program chair for Digital Cinema 2001. He introduced Karen Brown the Acting Director of NIST and William Mehuron, Director, Information Technology Laboratory. They gave a welcome to the attendees and a brief overview of what NIST is all about. NIST believes that because of its neutrality it could better serve as a catalyst to bring the industry players together.

A recap of the speakers is as follows:

Phil Lelyveld, VP Digital Industry Relations, The Walt Disney Company, gave an overall view of the major elements of the digital cinema process from content origination and digitization through compression, encryption, security, transport, storage, playback, exhibition, and back channel.

John Fithian, President of NATO (National Association of Theatre Owners), spoke of the need for digital cinema to improve the theatre experience, which could be the most important technological transition since the advent of sound. He pointed out that none of this will come easy, however. Significant issues and challenges confront the transition to digital cinema. Questions that remain to be answered are: How will it be financed? Who will be in control? Which technology will be embraced?

NATO has over 700 members representing approximately 25,000 screens in the US and Internationally. He pointed out that NATO wholeheartedly endorses the SMPTE DC-28 study group and helped form the University of Southern California’s Entertainment Technology Center’s (USC/ETC) Digital Cinema Lab.

John pointed out that today a theatre operator can equip a projection booth with a 35 mm film projector for about $30,000 and it will last many years. A digital projection unit currently is in the $100,000 range and will be obsolete in just a few years.

As to control issues, theatres now control the show as long as they comply with contractual obligations. How will control issues be resolved in the future? With nine major exhibition companies in bankruptcy and others fighting to stay alive, paying for popcorn supplies can be quite a challenge. Digital Cinema must be better than film, but the jury is still out.

John commented in closing that on the technical side, digital cinema must be built towards open standards that promote competition, worldwide compatibility and interoperability. On the business side, however, very little industry wide planning has taken place.

Brad Hunt, Senior VP and Chief Technology Officer, MPA (Motion Picture Association), outlined some of the goals for digital cinema from the member studios viewpoint.  In addition, the member companies of the MPA are preparing a document which will more specifically outline a consensus view of the System and Performance Requirements for Digital Cinema.

Mike Tinker, Head of Video and Multimedia Applications, Sarnoff Corporation, stated that digital cinema is about to happen, but he predicted it will be very different five years from now from what it is today. In fact, he said it will be a transforming event that will blur the edges between traditional movies and other forms of entertainment. Theatres, he said, will become a new kind of entertainment center in which linear story telling in moving pictures will be only one of the possibilities available to patrons.

Steven Morley, VP Technology, Digital Media Division, Qualcomm, spoke on their proprietary Image Compression System that uses an “Adaptive Block Size” DCT approach.

Gary Demos, President, DemoGraFX, pointed out that current practices in HDTV are sub-optimal for digital cinema. Of special consideration is the opportunity to increase the cinema frame rate above 24 fps while retaining 24 fps interoperability by utilizing 72 fps.

George Scheckel, Jr., VP, Digital Cinema and Content Production, QuVIS, Inc.. spoke on the use of a priority encoding technology called Quality Priority Encoding (QPE), that captures all the information present in the image so that a statistical guarantee can be made for the resultant image quality even though the data stream will vary. QPE has its roots in wavelet-based algorithms.

Matt Cowan, Principal, Entertainment Technology Consultants, showed various digital cinema film clips mastered using a Texas Instrument DLP Cinema projector. Bit rates for the various clips ranged from 45 to 60 Mbits/sec and were displayed on a prototype Digital Projection DLP Cinema projector using the Texas Instruments “Black Chip” DMD’s. The clips were displayed with 1280 x 1024 pixels and with 1.5:1 and 1.9:1 anamorphic lenses.

Alan Balutis, Director, Advanced Technology Program at NIST, presented an overview of the Advanced Technology Program (ATP) at  NIST. He explained how the program co-funds high-risk, enabling technology developments with the potential for broad-based economic benefits. He also provided details on new initiatives and the role of Digital Cinema in the program.

Donald Mead, VP Digital Electronic Cinema, Inc., spoke upon the key issues and work going on at MPEG, a subdivision of the International Standards Organization (ISO).

Robert Rast, VP Business Development, Dolby Laboratories, gave a briefing on the activities of the SMPTE DC-28, Technology Committee on Digital Cinema, its progress and outlook.

Jeffrey Lubin, Senior Member of the Technical Staff, Sarnoff Corp., talked about the quantitative modeling of a human observer’s ability to determine differences between two image sequences and the application of visual modeling to a “perceptually lossless” digital compression system using the “JND” method of measurement.

Edward Kelley, Physicist NIST, spoke about the complexities of measuring the performance of electronic displays in digital cinema and the surprises that can affect the reproducibility of the measurements.

Michael Brill, Sarnoff Corporation, spoke on the Encoding of Color Images in digital cinema and summarized the work of the SMPTE Digital Cinema Ad Hoc Committee on Colorimetry DC28.25.

On the second day Sean Adkins, VP Advanced Technologies, IMAX Corporation, spoke on the technical, aesthetic and business elements of the cinema highlighting the ways in which the projected image quality affects each of these elements.

Thomas MacCalla, Jr., CEO, Entertainment Technology Center, spoke on the goals of the USC/ETC as a proving ground for the ideas that digital cinema will be testing in the future.

Paul Breedlove, Digital Cinema Business Development Manager, Texas Instruments, spoke on TI’s Digital Cinema Projection Systems Field Demonstrations at 32 theatres worldwide. He pointed out that 16 films have been shown in digital cinema to date with more coming. The last theatre complex just installed in Japan has no film projectors, only DLP Digital Cinema projectors.

The conference ended with a panel of speakers answering questions from the audience. The turn out was over 250 attendees with a lot of attendees coming from the East coast. NIST will make the presentations available on-line soon at:

Even though the conference did not reveal anything new on the digital cinema scene, it did serve as a focal point for some of the many issues.

The day before the conference the movie “Bounce” was shown to early attendee arrivals in digital cinema on the wide screen in the Green Auditorium using a prototype Digital Projection DLP Cinema projector.


Subject: Abandoning Ship
By:  Larry Bloomfield

Three rather big events occurred this past week. First the resignation of FCC Chairman William E. Kennard.

As my sources have it, Kennard was going to be history, no matter what. If the folks in Florida had learned how to count votes and the governor of that state hadn’t been the new President’s brother, perhaps Gore would have been sitting the White House.  Had that been the case, our Washington sources tell us that Kennard was in line for a White House Office appointment. Well that didn’t happen.

Knowing he’d have one hell of a time with President GW’s administration, no matter how long or short the remainder of his term was to have been, he joined the other Washington bureaucrats and, with the rest of the rats, abandoned ship!

You can read the list of his supposed accomplishment in a press release on the FCC web site at:

Kennard has always been so proud of his part in deregulation. Deregulation is not a very good thing to be proud of.  There is not one good example where the citizenry ever got benefits from deregulation. Just think of deregulation’s success stories: The break up of AT&T, deregulation of the broadcast industry, deregulation of the airline industry – Have I made my point?  Just ask any Californian, especially if he or she has just gotten their new electric bill about deregulation of the public utilities.

This is only wishful thinking but, may be, some day, these appointment will NOT be based strictly on political favor and become seats for the learned, experienced technical types who care more for the Quality of Service (QoS) for the airwaves they are supposed to be the stewards of, rather than the political whims of who ever is in the White House or the majority party in either house of Congress.

One engineering associate expressed his view when he said: “Perhaps we could at least hope for the day when we could have a nonpolitical chairman with technical background and 3 democrats and 3 republicans appointed to the commission. Then maybe it wouldn't be so politically wishy washy.”

Like him or not, Kennard was in the right spot at the right time when some rather interesting mile stones were passed.  Some may think of them as being more like passing kidney stones, but Kennard did run the FCC during some rather interesting times. Probably the most significant of which, during his three year tenure, was the launching of the Telecommunications Act of 1996 and the implementation of LPFM.

Kennard was, however unable to get DTV very far off the ground, either terrestrially or with a digital must carry mandate.  He was also unable, despite cajoling and veiled threats, to get the cable industry to come up with a transmission standard that would work into a “common” set top box. He may well be remembered in a much more unfavorable light than his predecessors, Reed Hunt.

In his resignation letter to President Clinton, he wrote, "I feel very privileged that I was able to serve as Chairman of the FCC at a time when communications technologies are so dramatically changing the way the American people live, work, and learn."

Goodbye Mr. Kennard.  Don’t let the door hit you in the ………….

With Kennard gone, who will fill the office of Chairman?  We didn’t have to go far to hear Washington’s speculation on that question: Michael Powell! Yes, the former Chairman of the Joint Chiefs of Staff, and our new Secretary of State, General Colin Powell’s kid. What is really a contrast is that Colin's son was appointed to the FCC by Clinton. 

Based on his track record, to date, he is against Internet regulation, ownership limits on TV stations and cross ownership Newspaper/TV restrictions. He is a very socially liberal republican.  He is for tax credits to inspire minority ownership of radio and TV stations. On LPFM he seems to be "in the middle." He partially dissented to the ruling.

From Michael Powell's partial dissent: “This item’s goal is to create a class of radio stations “designed to serve very localized communities or underrepresented groups within communities.” Notice of Proposed Rulemaking, MM Docket No. 99-25, 14 FCC Rcd 2471, 2473 (1999). Attempting to give greater voice to narrower interests is generally laudable and I support the objective.  But, the question that gives me pause is what the cost is to existing stations that provide equally valuable service to their communities.  Because this Order fails to give credence to this concern, I respectfully dissent in part.”

This may all be wishful thinking, though.  With the cost and hording of broadcast properties by a narrow variety of deep-pocket entities, it is nearly impossible for the existence of a Mama-Papa broadcast facility today, as it once was in a bygone era. At best, a Mama-Papa ownership could only hope for an independent status in a not so desirable market. If you disagree with this, look at the Young Broadcasting acquisition of KRON in San Francisco. They’re not so Mama-Papa and they lost: Try viewing an NBC program on that outlet anytime after December 31, 2001.

Looking at President GW’s appointments, it appears to be a reprise of daddy’s administration. It’s more liken to a transplanted 70's and 80's "ecology" than to call it a "new" administration; unless, of course you're a multi-billionaire.  As one colleague put it: “Get ready to grab your ankles!”

There are those who speculate that, with Colin Powell’s son in the driver’s seat at the FCC, it might be fun to see it run like the military. And maybe, as another colleague put it: “Perhaps Eddie, Lowry and Mel will get to sit on some of those fancy $200,000 toilet seats when they drop in to visit after their monthly congressional bag drops?”

We will conclude this speculation with even another quote from an associate: “It'll be fun to see the FCC run like the military. Might be a little more painful for us: LPFM's guarded by the Marines. The Army enforcing EEO reporting. The Air Force checking tower lights.  It's a bright new day.”


Subj: New found Power
By: Larry Bloomfield

The second big story is about Billy Tauzin, the Republican Congressman from Louisiana. I think Variety best described him as “the feisty and dynamic Louisiana politician with a keen interest in the TV biz.”  Mr. Tauzin was selected by his peers to chair the powerful House Commerce Committee, replacing Rep. Tom Bliley (R-Va.), who had to step down under the House term-limit rules.

Take the time to visit Congressman Tauzin’s home page at: where you are given the option to view it in either English or Cajun French. No one can toot their own horn better than a US politician, no matter whose side they are on.

With Tauzin heading up the Congressional Commerce Committee and Sen. McCain  (R-AZ) his counter part in the Senate, stand by: As one man said, “you ain’t seen nothing yet.” Expect some action in the area of digital TV.  To say that Tauzin is frustrated over its delay in getting up and running would be a gross understatement. Digital must carry is another key item to keep an eye on.

With out belaboring this story, expect some great things form Tauzin in his new capacity. You might just be surprised.  He has his own way of doing things and it is unlikely that anyone else would have the better balance when it comes to the interests of both the public and broadcasters.  Good luck Congressman.


Subj: Loss of a Legend
By: Larry Bloomfield

The third story is the kind that is never easy to report.  It is with great regret that we must inform you of the passing of a person who became a legend in his own time.  At age 87, William Redington Hewlett passed away this past week in his home in Portola Valley, near San Francisco, CA.

Hewlett, along with his partner, David Packard, are credited with being the catalyst that brought Silicon Valley into being.  The best descriptions of his contributions to the electronics industry, broadcasting and humanity can best be found at two web sites.

If there is an afterlife, I have no doubt that his rewards will be befitting the great person and gentleman that he was in this life.


Subject: PBS does Inauguration of GW and his running mate in HDTV
From: PBS

The Public Broadcasting Service (PBS), WETA/Washington, DC, KCTS/Seattle, and NHK of Japan will provide the 26 digital PBS stations nationwide with live, high-definition (HDTV) coverage of the swearing-in ceremony of President-elect George W. Bush and Vice President-elect Richard Cheney on Saturday, January 20. This event marks the first time the inauguration of an American president and vice president will be presented in the new digital television format.

“PBS and its member stations are committed to being at the forefront of DTV development and to using this technology for public benefit,” commented Edward P. Caleca, PBS senior vice president, technology and operations. “We believe, that Providing a live, high- definition broadcast of this historic event to stations across the country affirms our leadership position as well as our public service mission.”

Local PBS stations planning to offer the HDTV broadcasts include:

 1. KCET/Hollywood CA;
 2. KQED/San Francisco, CA,
 3. KRMA/Denver, CO;
 4. WETA/Washington, DC;
 5. WKPC/Louisville, KY;
 6. WLPB/Baton Rouge, LA;
 7. WGBY/Springfield, MA;
 8. WMTT/Annapolis/Crownsville, MD;
 9. WCBB/Lewiston, ME;
10. WTVS/Detroit, MI;
11. KTCA/St. Paul/Minneapolis, MN;
12. KCPT/Kansas City, MO;
13. WMPN/Jackson, MS;
14. WENH/Durham, NH;
15. WNJT/Trenton, NJ;
16. KNPB/Reno, NV;
17. KOAC/Corvallis/Eugene, OR;
18. KOPB/Portland, OR;
19. WLVT /Allentown, PA;
20. WITF/Harrisburg, PA;
21. WHYY/Philadelphia, PA;
22. WVIA/Pittston/Scranton, PA;
23. WRLK/Columbia, SC;
24. KBYU/Salt Lake City, UT;
25. KCTS/Seattle, WA;
26. WMTV/WMVS Milwaukee, WI.

Obviously in order to view the HDTV coverage offered by the 26 digital PBS stations, viewers must have DTV receivers.

WETA will provide commentary, packaging and technical coordination for the on-site coverage supplied by the Washington, DC news bureau of NHK of Japan.

The HDTV broadcast of the inauguration will begin on Saturday, January 20, at 11:30 AM EST – 8:30 AM PST. PBS will also offer a NEWSHOUR SPECIAL REPORT presenting live standard definition coverage and analysis of inaugural activities beginning at 11 Am EST.  That coverage is expected to conclude at approximately 1 PM and will be anchored by Jim Lehrer.


Subj: Motorola Stirs the Pot
From:  Tabitha Bailey

There is a battle going on in the living room that most people are not aware of, and it is just now starting to heat up.  Up until just recently, cable was the only option for end-users to enjoy home entertainment services such as TV and pay per view.  Now, DSL is emerging as a competitor to cable, and with Motorola's solution, customers will be able to receive services such as regular TV, VOD, 3D games, Karaoke, Web browsing, email, plus additional services.

To make this picture bright for Motorola.  They are offering the full spectrum of broadband home entertainment services.  The Broadband Communications Sector supplies set-top boxes for the cable industry. Now the Multimedia Solutions Division announces Streamaster 5000, a multi-function DSL set-top box, along with two customers (Aliant and TransACT - Canada & Australia), plus a trial in the US is going on with Blockbuster and Enron.  Very exciting news for the team at Motorola that has been working to get this launched.

Just thought you’d like to know.


Subject: MEMO

From: Sinclair Broadcast Group
To: NAB and MSTV Boards of Directors dated January 11, 2001

Subject: Recommendation to Authorize Phase Two Testing

1. Phase One Effort Raises Questions.  The Phase One effort to determine the relative effectiveness of 8VSB and COFDM as broadcast transmission standards has raised as many questions as it answered. While Sinclair has maintained for several years that 8VSB was not replicating our analog service, the test results confirming our assertions have come as a surprise to many members of the Testing Steering Committee. Using the acknowledged best receiver available, 8VSB could not be demonstrated to reach the same UHF audience as today’s NTSC-based system. This was painfully clear when a comparison was made between the two standards using simple antennas at a six-foot elevation, inside the City Grade of the stations in the test.  8VSB could only be received at between 35 to 45% of the test locations while COFDM (operating a data rate higher than 8VSB) was received at double that rate. These results were obtained in spite of the fact that the COFDM receiver was suffering from certain “non-linear” distortions that could have had a serious detrimental effect on its ability to perform and were unrelated to the COFDM modulation system.

2. Receiver Front-end Deficiencies.  At the thirty-foot test elevation we believe that 8VSB did not perform at a level that could be considered satisfactory as a standard for free over-the-air television, given today’s consumer expectations.  COFDM at the higher data rate also failed to meet our expectations. Given the 4db advantage that 8VSB may have over the tested configuration of COFDM in carrier-to-noise (C/N) performance, there was an observed advantage of 8VSB over COFDM in the far field. Having observed otherwise in previous experiments, we at Sinclair are concerned that the COFDM receiver’s faulty front-end design may have seriously contributed to this outcome. In short, we believe there are legitimate reasons to suspect that the vast majority of the COFDM results are tainted by problems in the COFDM receiver’s front-end that have nothing to do with the standard itself.

3. Deficiencies Require Definitive Answers.  One of the objectives of this independently funded effort by our industry was to perform a scientifically sound study and publish a report. The questions raised by the late discovery of the COFDM receiver problem demand a further investigation to determine the impact of this problem before any final conclusions or actions can be taken. This fact alone strongly suggests we are not done and cannot close out the option to continue to a Phase Two effort. In fact, the first recommendation of the Engineering Committee is to investigate the impact of this problem, if a Phase Two effort is authorized. The first of a number of set-top boxes which have been manufactured to the requirements of the US market, taking into account the difficult nature of the RF environment, will be delivered in a matter of a few days. To not address this issue immediately and decisively, when solutions are at hand, can be viewed as being willfully negligent to the facts and disingenuous to the intent of this entire process.

4. Some Phase One Efforts Delayed Until Phase Two.  The COFDM receiver problem is not the sole reason to authorize the Phase Two efforts. At the time funds were solicited from the industry, the contemplated Phase One effort was to include a test to determine the trade-off of data rate versus robustness of reception (lower data-rate yielding lower C/N requirement) using COFDM at a slightly lower data rate at all sites, including indoors. Unfortunately, in its zeal to evaluate the latest Zenith 8VSB receiver, the Engineering Committee agreed to postpone the lower data rate study until Phase Two. Sinclair and others agreed, at the time, to this “trade off” with the understanding that Phase Two would be undertaken. It is essential for us to fully understand the trade-off between ease-of-reception and data rate in varied conditions. This assumes even greater importance given the poor performance of 8VSB as compared to COFDM, in the area of ease-of-reception by simple antennas.

5. Future Business Options Should Be Preserved.  Our industry is under competitive attack from many quarters and our future competitiveness demands that we understand what options we may have in order to respond to these attacks. G3 is an example of future competitive attacks given that that technology will be able to deliver data-rates of 2 million bits-per-second, supporting a wide variety of directly competing programs and services. Portable and mobile applications may become extremely important to us as means to protect our economic health and we should not preclude these as options in the future – near or distant. The days of simply delivering a picture to a fixed home receiver connected to an outdoor directional antenna passed us by decades ago. As just one example, there is an emerging industry that is focused on the delivery of data services to automobiles. It is estimated that such applications will be a $50 billion a year business in just five years. Given the broadband delivery capability inherent in our DTV signal, we should not willingly be excluded from this or any other emerging market. A Phase Two effort should be structured to investigate this and other applications for our spectrum. It is generally agreed, even by the ATSC organization, that today’s 8VSB is not capable of providing a portable component, let alone a mobile one. Thus, we at Sinclair are strongly committed to investigating these and other reception applications that use simple antennas. We strongly urge the NAB and MSTV Boards to recognize the very real threats to our industry and to authorize a Phase Two effort to flesh out the possibilities that await us in both 8VSB and COFDM.

6. Principle of Maximization Not Yet Considered.  Another and equally compelling reason to proceed with the Phase Two effort is the impact of operating COFDM at a power level that will give it the same coverage capability as 8VSB. The study conducted in Phase One was limited to determining the interference effects of COFDM operating at the same assigned power as 8VSB. This study revealed, contrary to allegations from some sources, that there was no meaningful impact on today’s NTSC by the use of COFDM. In short, no DTV Table of Allotment issue is raised by the use of COFDM at the FCC’s originally assigned DTV power levels. However, the FCC has authorized DTV stations to maximize their power levels as long as they do not exceed a defined level of new interference. For example, WBFF-DT in Baltimore is assigned 50kW. Under the Principle of Maximization, WBFF-DT can increase its power level to well over 500kW. Thus the coverage provided by COFDM can certainly be made equal to that of 8VSB. In addition to the similar coverage area, a broadcaster using COFDM would also have the added advantages of ease-of-reception and portability options demonstrated in Phase One testing (not to mention the possibility of mobile service that we know is not available with 8VSB). The option of any single broadcaster to choose these configurations is a business decision that should not be eliminated in an attempt to preserve exclusive reliance on 8VSB as the sole transmission method.  A Phase Two effort to more precisely understand the opportunities that COFDM offers is an essential step to buttress broadcasting’s defense against the encroachment of competitive services.

7. Promised 8VSB Improvements Have Yet To Materialize.  The slow progress in 8VSB receiver improvements and the string of broken promises from the chip and receiver manufacturers should give us pause and concern. The 8VSB enhancement report, that was part of Phase One, did little but to repeat the same hackneyed statements that were put forward almost two years ago. Sinclair’s efforts to introduce COFDM as an alternative to, but not a replacement of, 8VSB were blunted by these same grand promises of successful laboratory simulations and soon-to-be created “miracle chips” that never materialized. The fact that any 8VSB performance progress has been made at all can be attributed to the fact that COFDM was being considered by our industry. We believe that only as long as we continue to investigate COFDM and consider it as a legitimate possibility then the 8VSB camp will continue meaningful development efforts. We are concerned, as the entire industry should be concerned, that to remove this competitive element from the scene will do nothing but eliminate the single most powerful motivation to improve 8VSB performance: that is, competition. In addition, there are no assurances that given the continuing lack of real demonstrated 8VSB improvements in ease-of-reception, portability and mobility that we will not be revisiting this subject three years from now. A continuing COFDM research effort and possible implementation will give our industry and our businesses a “safety net” if the promises coming from the 8VSB camp are again broken.

8. Redoubled Efforts Send Strongest Message to Washington.  These tests have proven conclusively that the inflexible ATSC standard, as currently configured, does not support the broadcasters’ requirements nor does it come close to replicating the level of service available with today’s analog service.  In fact, these results give us no hope of any dramatic increase in consumer adoption of DTV.  To stop our industry-initiated efforts, to accept the status quo, and to rely on interests outside of our industry (i.e. the consumer electronics industry) to make good on promises they have yet to keep only sends the wrong signal to the Washington policymakers.  We have already been under assault by those on Capitol Hill and at the FCC, and by adopting a “maybe it will get better” attitude signals that we are not doing everything in our power to successfully rollout the DTV service.  Instead, a consolidated industry commitment of time, effort, money and manpower sends an unassailable message that we will spare no expense and overlook no option in order to deliver the best possible DTV service to the American consumer and to return the analog channels as quickly as possible. Anything less will risk the loss of our spectrum when Congress realizes the rollout has failed and we did not try our best to save it.  Our competitors will be the first to highlight our laissez-faire attitude.

9. It’s The Sponsorship, Not The Phase Two Testing That Is Up For Debate. Finally, this matter is so critical to our business plans and our industry survival, that Sinclair firmly believes that individual station groups and broadcasters will take up the effort and continue to press for a transmission standard that meets our requirements. As this will likely happen, the question for both Boards is should this quest happen within the already existing operating structure of this program? Further, to the extent that there are those who wish no longer to participate, those that do should be given the opportunity to provide the additional funding to find the final truth as they relate to broadcasters requirements. We should point out that these are the same requirements that even the ATSC organization recognizes as legitimate and are the same requirements that the ATSC admits cannot be met with today’s DTV standard using 8VSB.  The ATSC’s own VSB Performance Ad Hoc Group has urged the committee to “investigate DTV transmission system alternatives” and that “[it] is not known whether it is theoretically possible, and therefore it is not clear how or when 8-VSB receivers could meet certain broadcaster requirements without changes to the standard.”

10. Unified Industry Effort Is The Most Desirable Outcome.  A continued unified industry effort to resolve recognized problems may invite outside scrutiny, but it is the only action that will insulate us from serious attack while we toil to get our digital house in order. Therefore, in the interest of a unified industry and the future health of our companies we urge you, the members of the NAB and MSTV Boards of Directors, to support a continuation of the effort started, but not yet completed, in Phase One. We urge you to authorize a meaningful Phase Two effort to determine the true capabilities of COFDM and to further 8VSB enhancement efforts in light of our industry’s stated requirements.

Lastly, while the majority of the participants in the steering committee may be well-heeled, there are many more interested broadcasters who are not. The economics of their DTV business must be considered as materially more tenuous than larger groups. We have an obligation to them regardless of whether they contributed to this process and must be given the maximum opportunity to compete and not be straddled with a standard that because of its lack of functionality may cause their ultimate downfall.

Thank you.


Subject: Rupe Stops Acquisitions-Eyeing Just DirecTV
From: Sky Report

News Corp.'s Rupert Murdoch has put a stop  to any more acquisitions as the company prepares  to make its biggest all-time deal, its rumored purchase of DirecTV, the Financial Times reported.

The paper quoted one unnamed executive as saying that News Corp.'s financial wizards "are looking under every rock for money" to buy DirecTV. The Financial Times valued the acquisition at $40 billion, which would make it the biggest acquisition in the company's history.

The London-based newspaper said Murdoch is asking company officials to steer away from acquisitions and investments outside the United States until negotiations for DirecTV are complete.

Last week, wire sources reported that News Corp. is reportedly close to concluding acquisition talks with Hughes Electronics and its DirecTV unit, allowing Murdoch's media machine to again pursue the spin off of its worldwide satellite TV arm Sky Global Networks.


Subj: Where’s all the DTVs?
From Mark Shubin (Excerpted from Mark's Monday Memo - 15 January 2001)

The supposed 100,000 8-VSB receivers in homes - There almost certainly aren't -- unless there was a miraculous sequence of manufacturing, distribution, and sales in the last month of the year.  Todd Thibodeaux, the Consumer Electronics Association's (CEA) chief economist and VP of market research, says that this is what he REALLY said to the reporter: With new receiver manufacturers in the market, CEA was "hoping for a big explosion in box sales during the first quarter of this year, which would lead us to hit the 100,000 mark for decoder installs in the very near future."  Here are the numbers he provided to me for CUMULATIVE sales to DEALERS from 1998 through November 2000:
        separate set-top boxes ------- 54,690
        integrated receiver/displays - 11,579 (projection and direct-view)
        Grand total 8-VSB receivers -- 66,269 sold to DEALERS

I'm a little surprised by the large-ish number of integrated receiver/displays, but the overall figure is about what I expected. Again, please remember:  These are sales to DEALERS.  Every 8-VSB receiver in a store, a warehouse, an independent lab, another manufacturer's evaluation center, a TV station, or a teleproduction facility is one less of that figure that is in a home.

FYI, for comparison, in the single week of December 23-29, 2000, 529,605 analog TV receivers and 317,033 DVD players were sold to U.S. dealers.


Subj: Summary of remarks of Mark E. Hyman Vice President, Sinclair Broadcast Group, Inc.

Facts Are What Congress Will Hear.  There are four irrefutable facts to keep in mind:

The public policy goal is to move the public from analog to digital in as short a period of time as possible in order to return analog spectrum.  All other discussions are only distractions.  If we reach 85% DTV penetration -- by any means -- then Washington is very happy.

According to CEA (press releases of 4/24/00 & 11/2/00) less than 48,000 DTV receivers were delivered to retailers through Nov 00.  At that rate of adoption, it will take 12,500 years to replace the installed base of 300 million analog sets and 4,000 years to reach 85% penetration with one receiver per TVHH.  By comparison, over 25 million analog sets were sold last year.  There is no hope that reliance on the status quo will ever stimulate meaningful consumer adoption and Congress knows this.

It took four years for the DVB Project Office to form as an organization, conduct R&D, begin testing, and adopt the DVB-T standard. It took about five years since “discovering” digital to adopt the ATSC standard.  Question the motives of anyone who suggests adoption of an existing global standard would take upwards of ten years.

If the American consumer cannot spend thousands of dollars on DTV and receive a signal with the same ease as I can with a $99 handheld, then we will never see the level of adoption by the masses needed to make this a commercial success.  It is this reality – coupled with a “maybe it will get better on its own” attitude  – that places our spectrum at greatest risk.

Status Quo is Inadequate.  These tests have proven conclusively that the inflexible ATSC standard, as currently configured, does not support the broadcasters’ requirements nor does it come close to replicating today’s analog service.  These results give us no hope of any dramatic increase in consumer adoption of DTV.  To quit our industry-initiated efforts, to accept the status quo, and to rely on interests outside of our industry (i.e. consumer electronics industry) to make good on promises they have yet-to-keep only sends the wrong signal to Washington policymakers.

One Chance to Get it Right.  Today, Congress is being patient as we get our digital TV house in order.  It is unlikely we will have the luxury of Congressional patience to revisit the standard again in three years time when there is widespread recognition that the rollout has failed. Are broadcasters willing to risk their entire future on an effort that is 90% complete?

Only a Complete Effort is Our Best Defense. We invite criticism and Washington-imposed penalties if we adopt “maybe it will get better” attitude as that signals we are not doing everything in our power to successfully rollout the DTV service.  Instead, a consolidated industry commitment of time, effort, money and manpower to complete the testing that was started and is already fully-funded sends an unassailable message that we will spare no expense and overlook no option in order to deliver the best possible DTV service and to return the analog channels as quickly as possible.  Anything less, will risk the loss of our spectrum when Congress realizes the rollout has failed and we did not try our best to save it.  If Congress does not recognize it, then our competitors will be the first to highlight our laissez-faire attitude.


Subj: A cautionary tale
From: Burt I. Weiner

(Ed Note: Although this story may or may not be true, but it is typical of the kind of things bean counters bring to the broadcast table.)

There is the story of the new chief financial officer who arrived at an American television station. He had come from another industry, such as banking, and he announced that it was his intention to learn about the television business from the ground up. He was going to visit every studio, every broadcast site and inspect every single facility.

So the day came when he was scheduled to take a look at the station's transmitter facilities. He drove way out of town, up a slippery track into the hills to the mast and the surrounding buildings. Clipboard in hand, he was shown around the site by the chief engineer, who sought to explain what each piece of equipment was used for. Then the two men came across a big diesel generator.

The finance man asked the engineer, "What's this for?"

"Oh," says the engineer, "that's just in case the power goes down. Obviously if there's a power cut for some reason or other we've got to continue broadcasting."

The finance man thought about this: "So how often have you used it?"

And the engineer said: "Well, I suppose, only twice in 15 or 20 years since we've had the site. But it remains a vital piece of equipment."

So the finance director went back to town and told the board of the company: "Look, the engineering people are wasteful. They've got this very large generator on the top of a hill and it's just sitting there not being used. It's a complete waste of money."

He made a very persuasive case that the company should sell the generator and the board agreed.

Before too long, a buyer was found and the day came when a big semi-trailer with a crane drove slowly up the slippery track, up to the top of the hill to take the generator away.

The crane very slowly and very carefully lifted this big generator onto the back of the truck and the truck driver turned the keys in the ignition to drive away.

Except as the driver proceeded down the hill the truck swerved on the slippery road and fell sideways under the weight, with the consequence that the generator rolled off the back of the truck all the way down the hill, hit the power pylon and took the station off air.

If only the finance director had listened to the engineer!

Burt I. Weiner

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